The Hindu Business Line : Liquidity panel hears out views of industry

Mumbai, Oct. 15 The committee set up by the Finance Minister to assess the liquidity conditions in the system will submit its interim report by next week to the Union Government, said Mr Arun Ramanathan, Finance Secretary and the head of the panel.

The committee met industry representatives in Mumbai on Wednesday to discuss the liquidity crunch in the system. The day-long meeting saw the top management of various banks, non-banking financial institutions, mutual funds, housing finance companies and small-scale industries airing their problems to the committee. Mr C.B. Bhave, Chairman, Securities and Exchange Board of India, was also present.

“A holistic view about the liquidity situation will be taken. Data will be compiled and collated to assess the liquidity gap in the system. The Reserve Bank of India has taken proactive measures and the system will not be starved of liquidity”, said Mr T.S. Narayanasami, CMD, Bank of India and Chairman, IBA, who is also a member of the committee.

MF representation

Representatives of some mutual funds along with the AMFI Chairman, Mr A.P. Kurien, explained to the committee the pressures they are facing. However, no specific recommendation has been made by the mutual funds, said Mr Kurien.

“We have suggested that the Rs 20,000 crore provided under the special repo be kept outside the SLR limit and are confident that more banks will come forward and lend to mutual funds”, said Mr Kurien.

Plea for ECB access

Housing finance companies have asked for more funds to be released for forward lending, said representatives. “We want that the external commercial borrowings window to be opened to housing finance companies”, said Mr Kapil Wadhawan, Vice Chairman and MD, Dewan Housing Finance Corporation.

The representatives from various NBFCs have stressed the need for banks to continue releasing funds to NBFCs. “NBFCs have a very important role in delivering retail credit and its important that banks don’t stop releasing funds to us”, said Mr T.T. Srinivasaraghavan, M.D, Sundaram Finance.

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