The Hindu Business Line : Liquidity situation may be focus of financial markets panel meet

Mumbai, Nov. 6 The liquidity situation in the economy is likely to again dominate Saturday’s meeting of the High Level Coordination Committee on financial markets, sources said.

The HLCC had last met on October 1 and chiefly deliberated on ways to ease the tight liquidity situation.

Much has happened since that meeting. On October 6, SEBI lifted its October 2007 restrictions on issue of participatory notes by foreign institutional investors.

In mid-October, the Government doubled the investment limit in corporate bonds by FIIs to $6 billion, while the ratio of investment of 70: 30 in equity and debt by FIIs was removed by SEBI.

Subsequently, key interest rates too were reduced by the Reserve Bank. While the first set of measures was designed to enhance FII inflows, the second would release more funds from banks into the domestic economy — both measures serving to enhance liquidity.

The meeting is likely to take stock of the situation pertaining to issue of P-notes by FIIs as well as lending of Indian shares by FIIs overseas, said sources.

The HLCC comprises officials from the Finance Ministry, the Insurance Regulatory Authority of India, SEBI and RBI.

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