The Hindu Business Line : India Inc satisfied with decision to hike reverse repo rate

JUSTIFYING the RBI's decision to increase its Reverse Repo Rate (RRR) by 25 basis points to 5.25 per cent , the Federation of Indian Chambers of Commerce and Industry has said interest rates have gone up globally and have also firmed up in India.

The chamber has further said it signals a possible increase in bank interest rate in the long run and provides ample time to the market to adjust to the forthcoming change.

The chamber has also welcomed the clear definition on medium-scale operations of business houses and said it will provide banks much-needed clarity.

Further, the chamber said that the cluster financing approach would definitely help enhance flow of funds in a more efficient manner.

The Confederation of Indian Industry too expressed satisfaction with RBI increasing the RRR and revising the GDP growth forecast.

However, the chamber said it would have preferred the RBI adding its voice to the need for making prices more market determined and removing de facto controls that result in artificially repressing inflation and distorting consumer and investor behaviour.

The chamber has also welcomed the provision of allowing banks to issue guarantees or standby letters of credit in respect of external commercial borrowings by textile companies.

Welcoming the RBI's decision on RRR, the Associated Chamber of Commerce and Industry of India said it would have been appreciated if the apex bank had increased the bank rate by 25 basis points.

The chamber also hailed the feature of the mid-term review of annual policy statement that says that banks can fix their own target for financing the small and medium sector so as to reflect higher disbursement.

The PHD Chamber of Commerce and Industry too expressed satisfaction over the review.

It particularly welcomed the step of the apex bank to treat special purpose vehicle for financing infrastructure companies as financial institutions and said that this would encourage flow of funds to the infrastructure sector.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page