Home / Knowledge / News / ASSOCHAM urges RBI to cut CRR, REPO Rate
ASSOCHAM urges RBI to cut CRR, REPO Rate
03
Oct '08
Reduce CRR and repo rate by 1%, permit banks to borrow against government securities and provide dollars directly to oil companies rather than routing them through market for buying crude oil are some of the key recommendations of Associated Chambers of Commerce and Industry of India (ASSOCHAM) submitted to RBI to enable it pump in enough liquidity in market.

The recommendations submitted to RBI Governor by the ASSOCHAM President, Mr. Sajjan Jindal further points out that there are several Indian companies now looking for rupee funding as dollar financing is uncertain and is also not possible to raise within the RBI approved spreads.

The level of credit is therefore required to be redefined taking into account the base effect while planning for the future instead of squeezing the credit which will have serious impact on the survival and sustenance of the industry.

The ASSOCHAM representation also stressed that in its future credit policy, the RBI not only curtail CRR and repo rate by 1% so that Indian Inc's borrowing is facilitated to fund its capacity expansion plans.

The RBI should usher in a new era in which oil companies are directly provided dollars in advance so that these are able to hedge their crude purchases in a smooth manner. Currently, the practice is that the oil companies get dollar through different channels in markets.

Likewise, the commercial banks should be permitted to borrow against government's securities as it increases their credibility.

The suggested measures have become necessary so that Indian industry comes out of liquidity crunch. Currently, the cost of money at which Indian industry borrows varies between 25-28% which is very high as a result of which its margins have already shrunk.

Another suggestion made by the President ASSOCHAM comprise that the banks should consider relaxing interest rates on foreign currency deposits and RBI should divert part of its foreign currency reserves as deposits with Indian banks instead of investing in foreign government treasuries with a condition that these funds should be used only pre and post shipment credit for exports.

The Chamber has also sought easing of norms that govern External Commercial Borrowings to help industry raise funds. It has also recommended that RBI should relax the norms relating to lending to the market intermediaries to avoid the liquidity crunch.

The erosion of money from the stock markets at time of heavy selling pressure by foreign investors lead to liquidity tightening which only makes the situation worse,

The price and supply conditions may get worse if the Reserve Bank of India resorts to raising interest rate to control the spiraling inflation and the move would not only hurt the industry but also the consumers, pointed out ASSOCHAM assessment.

It holds that interest rates or tightening the liquidity through cash reserve ratio would not help as the problem does not lie with the quantum of money floating in the economy.


Must ReadView All

Textiles | On 19th Sep 2017

Karl Mayer expands service operations in Asia

Karl Mayer, a world leader in the production of warp knitting and...

Textiles | On 19th Sep 2017

Welspun bags Made in Green label by Oeko-Tex

Welspun, a leading home textiles manufacturer, has been awarded Made...

Courtesy: SGS

Textiles | On 19th Sep 2017

SGS expands testing facilities in Naucalpan, Mexico

SGS has expanded testing facilities in Naucalpan, Mexico, creating a...

Interviews View All

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Headhonchos
Indian textile value chain

Adopt innovative techniques, go for automisation rather than being...

Top executives
Textile industry

The foremost issue is bridging the skill gap

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Vaanee Bhatia
Gritstones Clothing

<div>Delhi-based Gritstones Clothing offers quality and exemplary style...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

September 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search