The Hindu Business Line : Assocham for removing interest rate cap on NRI deposits

(From right) Mr Sajjan Jindal, President, Assocham, with Mr Chozha Naachiar Rajasekar, President, The Tamil Chamber of Commerce; Mr Srinivasan K. Swamy, President, MCCI; and Mr Umesh M. Pujara, Chairman, Consultative Committee of City Chambers of Commerce and President, Hindustan Chamber of Commerce, at a meeting in Chennai on Tuesday. —

Our Bureau

Chennai, Nov. 4

The Associated Chambers of Commerce and Industry (Assocham) wants the interest rate cap on foreign currency deposits by non-resident Indians to be removed.

The industry body, which expects a further pull-out of about $ 20 billion by Foreign Institutional Investors, believes that tapping NRIs would be a good way of getting inflows.

In a meeting organised by the Consultative Committee of the City Chambers of Commerce here, Assocham’s President, Mr Sajjan Jindal, recalled that India had raised substantial amount of foreign exchange ($ 2 billion, in 1998) through an issue of Resurgent India Bonds issued by the State Bank of India.

Mr Jindal said that since March, when the Sensex was around 21,000, FIIs have pulled out about $ 30 billion. The market value of FII holdings has come down from $ 260 billion to about $ 80 billion, he said.

Asked if the measures taken by the RBI on Saturday to inject liquidity into the economy (through cuts in CRR and SLR) was enough, Mr Jindal said that it would be a few days before it became clear whether the measures are adequate.

He said that confidence is yet to come back to industry, but added that the meeting the top industrialists had with the Prime Minister and the Finance Minister on Monday has given industry some comfort.

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