India Inc has welcomed the Reserve bank of India’s decision to cut the Cash to Reserve Ratio by 150 basis points.Industry chambers were demanding a reduction in the CRR as well as Repo Rate to inject the liquidity in the system.
“This would go a long way in injecting additional liquidity into the system, which is the need of the hour”,said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).
Reiterating CII’s demand of creating a fund for supporting the capital markets, raising interest rates on NRI deposits and easing ECB norms, the director general said “that pro-active action from the Indian regulators would ensure that India remains an island of stability even as the financial crisis unfolds in the rest of the world”.
Federation of Indian Chambers of Commerce and Industry (Ficci) said reduction in interest rates was absolutely essential in order to give a push to investments, employment and demand which had taken a severe beating in the recent past. “Such confidence boosting measures are important to bring the stock market to normal levels” said a Ficci release.
The Associated Chambers of Commerce and Industry of India (Assocham) demanded a removal of the interest rate cap on the NRI deposits.The industry body also said , “ Foreign Institutional Investors should be encouraged to invest in Indian Corporate banks beyond current limit to an extent of $10 billion with lock in of inflows for one year”.