Thanking the RBI Governor for accepting CII’s recommendation for a 150 bps CRR cut, the CII Director General, Mr Chandrajit Banerjee said “CII is grateful to the RBI Governor for heeding the request from CII and effecting a 150 bps CRR cut as of 11th October. This would go a long way in injecting additional liquidity into the system, which is the need of the hour. This would help boost industry sentiments and proves yet again that the Indian Regulatory System is an agile one, which responds with necessary action in times of need.
Mr Banerjee reiterated that CII had recommended for the Mid – Term Review of the RBI’s Annual Policy, which is due later this month, the following: creation of a fund for supporting the capital markets; raising interest rates on NRI deposits and easing ECB norms. He 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.
The CII Director General went on to say that the RBI’s decision to cancel the auction of Rs 10,000 crore bonds scheduled for today is also welcome, as these auctions were putting further pressure on liquidity. In fact, the RBI should think of unwinding some of the MSS bonds held by it. These were raised at a time when liquidity was excess and should be returned to the system now that there is a shortage of liquidity.
