The Hindu Business Line : Provide ample liquidity, RBI told

NO SQUEEZE: The Finance Minister, Mr P. Chidambaram, and the RBI Governor, Dr Y.V. Reddy, at the meeting of the RBI Board in New Delhi on Saturday. — V. Sudershan

New Delhi , March 4

The Finance Minister, Mr P. Chidambaram, has asked the Reserve Bank of India (RBI) to ensure ample liquidity to the productive sectors and urged the it to refrain from taking any steps that would hamper the unfolding growth story of the Indian economy.

In response to the Finance Minister's request, the members of the RBI board on Saturday assured him that ample liquidity would be provided to the productive sectors, especially the manufacturing and services sectors.

"I requested the RBI board that there should be ample liquidity and nothing should be done to hamper the unfolding growth story. I have been assured that the RBI will provide liquidity to all productive sectors", Mr Chidambaram told newspersons after addressing a customary post-Budget meeting of the RBI board here. Stating that the Central Board of the RBI had discussed Budget proposals at their meeting, Mr Chidambaram said the board was appreciative of the proposals and noted the fact that the country was back on the fiscal correction path.

He also said that the RBI and the Government would jointly work towards the implementation of the Budget proposal that sought to enable farmers to receive short term credit at 7 per cent, with an upper limit of Rs 3,00,000 on the principal amount. "I discussed this proposal (7 per cent credit) at the meeting and the RBI has expressed full support," Mr Chidambaram said.

Currently, farmers obtain short-term credit from the cooperative credit structure and regional rural banks (RRBs), with refinance from Nabard. Moreover, scheduled commercial banks are also lending more to the farmers.

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Provide ample liquidity, RBI told