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Kamal Narang

Taking stock: (From left) Mr U.K. Sinha, Chairman, CMD, UTI Asset Management Company; Mr T. S. Narayanasami, CMD, Bank of India; and Mr Arun Ramanathan, Finance Secretary, at the first meeting of the committee on liquidity, in the Capital on Monday. –

Our Bureau

New Delhi, Oct. 13 The liquidity problem in the banking system has slightly eased after the recent cut in cash reserve ratio (CRR), but this cannot be read as a comfortable situation, the Indian Banks’ Association (IBA) Chairman, Mr T.S. Narayanasami, said here today.

“Liquidity has slightly eased after the CRR cut. But I am not saying the situation is comfortable. More steps are required to ease liquidity. More measures are forthcoming from the RBI”, he told reporters on the sidelines of the first formal meeting of the group constituted by Government to assess the liquidity demand.

Last week, following representations from corporates, banks and financial intermediaries that the issue of liquidity should be addressed in a comprehensive manner, the Finance Minister, Mr P Chidambaram, had set up a group to make a quick assessment of the requirements of liquidity and advise the Government.

This group comprises the RBI representative; the IBA Chairman and Bank of India CMD, Mr T.S Narayanasami; the UTI Chairman & Managing Director (CMD), Mr U.K.Sinha; the Larsen & Toubro CFO, Mr Y.M. Deosthalee; and the SIDBI CMD, Mr R.M. Malla. The group is required to submit an interim report this week.

Meanwhile, Mr Arun Ramanathan, Finance Secretary and also head of the group, told reporters after the first meeting that the members of the Group had shared some thoughts and decided the items that they needed to assess.

“We will be meeting again in couple of days to continue discussions. We have met for the first time today. We have not come to any conclusions today. The Government has already taken action. I do not have anything to add to what the Finance Minister had”, Mr Ramanathan said.

Last week, as part of its attempts to tackle the liquidity situation, the Reserve Bank of India (RBI) cut CRR by 150 basis points, leading to infusion of Rs 60,000 crore into the banking system effective Saturday.

Meanwhile, sources said that the options before the Government and the RBI to infuse more liquidity would include a cut in statutory liquidity ratio (SLR), more open market operations (OMO) including unwinding of Market Stabilisation scheme (MSS).

More Stories on : Credit Market | Outlook | CRR & Bank Rates

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