Credit Policy Impact: India Inc reaction mixedBS Reporter / New Delhi October 30, 2007Industry bodies Ficci, CII, Assocham, PHDCCI and FIEO today gave a mixed reaction to the 50 basis point increase in cash reserve ratio (CRR) announced by the Reserve Bank of India in its mid-term monetary policy review. Ficci, Assocham and FIEO were of the view that the CRR hike may further hurt credit growth. "While RBI has maintained the Bank Rate and Repo Rate at the earlier levels, the increase in CRR by 50 basis points will impound liquidity thus reducing lendable resources of the banks," Ficci said in a release.Ficci president Habil Khorakiwala expressed hope that the CRR increase will not have an adverse impact on the lending rates, which are already at a high level. Federation of Indian Export Organisations (FIEO) said the 50 basis points increase in the cash reserve ratio will adversely impact small and medium enterprises.FIEO president Ganesh Kumar Gupta expressed disappointment that no significant measures had been taken to reduce the cost of credit to the SME export sector in view of the appreciating rupee impacting export growth."An increase in CRR by 50 bps will restrict credit for the SME sector, and could create a liquidity crunch adversely affecting trade and industry," he said.Gupta also appealed for a package to bail out the SME export sector.CII said RBI
