The Hindu Business Line : Revamp credit delivery system: Assocham

THE Associated Chambers of Commerce and Industry of India (Assocham) has called for a restructured credit delivery system that would remove the structural bottlenecks and the high credit risks in the economy.

In a press release issued here, the Chamber has stated that in spite of the existing low nominal interest rates, the real interest rates in the economy are still high, and also the credit offtake is low. Therefore, at the present level, the bank rate and the CRR are not able to have the desired effect of reinvigorating the sluggish economy and rejuvenating the `animal spirits' on Indian entrepreneurs.

The release stated that the implementation of the proposed `improved credit delivery system' is what the industry would be looking at for bringing the economy out of the paradox where excess liquidity with banks and lack of availability of funds co-exist.

"While the upturn in industrial production in the last couple of quarters and the buoyancy in exports in the current fiscal have been reflected in the increased credit flow to industries, finance is not easily available to the sectors which need them badly," the release said.

The release also stated that a case in point would be financing the retail sector growth. "This is a sector which has seen considerable buoyancy in growth in the last couple of years, and because of the strong multiplier effects of the sector, it has a potential to grow by much more. However, the much-needed funds to fuel this growth seems to be in short supply, and the sector is finding it very difficult to garner adequate resources."

Assocham has also pointed that the economy now requires suitable fiscal and other policy measures to address issues impacting industrial growth, including infrastructure and capital markets. On the regulatory front too, the RBI has continued with its policy of moving the Indian banking system to higher levels of transparency and more efficient risk management norms. Yet, there are also certain key issues, which, if not addressed, may pose serious bottlenecks to the overall banking system.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Bank credit up Rs 15,152 cr

Assocham irked by States' `fictitious' tax demands

Australian trade team to pitch for investments

Apollo, ICICI Lombard tie up for emergency care

Lack of cold storage hinders flower exports from Kolkata

BRPL contracts 1.5 mt crude from Ravva field

Mukesh sees good future for plastics

Regulating pesticides — When a ban is not actually a ban

Revamp credit delivery system: Assocham

Bottled water norms likely by April