The Hindu Business Line : Assocham seeks 200 basis points cut in CRR, repo rate

Mumbai, Oct. 14 The Associated Chambers of Commerce and Industry (Assocham) has sought a 200-basis point cut in CRR and repo rate for India Inc to tide over the current liquidity crisis.

The Chambers President, Mr Sajjan Jindal, said to ensure growth momentum and a favourable environment for the industry there was an urgent need to go back to the rates prevalent pre-September 2007.

The Reserve Bank measures had led to about Rs 1.40 lakh crore being sucked out of the system and this has to be replenished urgently.

Dr Swati Piramal, Senior Vice-President, Assocham, said the global turmoil has thrown up a great opportunity for Indian companies to acquire assets abroad in technological and research and development, which were available for one-tenth of their earlier valuations.

The Chambers asked for creation of a $25-billion special fund from the foreign exchange reserves, exclusively to be utilised for ongoing and sanctioned infrastructure projects. This apart, there was a need to remove the cap on interest rate on NRI deposits and facilitate mutual funds to access the repo window.

Mr Jindal also called for a concession interest rate for home loans of less than Rs 20 lakh and look at the possibility of bringing down the risk weightage of real estate for bank finance.

Mr Jindal said now banks and financial institutions were unwilling to lend to each other and that there had been a total breakdown of trust. Hence, this called for a need to guarantee inter-bank lending by central banks of respective countries, regulators and fiscal authorities with better co-ordination.

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