The Hindu Business Line : FM hopes banks would begin brisk lending

NEW DELHI: Noting that there is adequate liquidity in the system now, Finance Minister, Mr P Chidambaram on Thursday expressed the hope that banks will begin brisk lending and advised stock market investors to take informed decisions and not resort to pa nic sales.

The finance minister also said inflation which dropped to 11.07 per cent, a fall for the fourth straight week, is still high but added that the rate of price rise will moderate further as global commodities and fuel prices continue to soften.

Stock markets it seemed took cues from Mr Chidmabaram remarks as the benchmark Sensex which was down by nearly 500 points in morning recovered 579 points by mid-session after his chat with reporters. However, the markets later closed in the red.

“If you go by the reverse repo, I think there is adequate liquidity. The point now is banks should not park excess funds with reserve bank. They have been advised to lend,'' he said.

Expressing the hope that brisk lending will take place after a slight freeze on credit noted in the first half of this month, he also sounded optimistic that firms will bring in money back to India as early as possible after the easing of external commer cial borrowings on Wednesday.

“Now RBI has allowed those who have raised money abroad to use it either for foreign exchange expenditure or bring it to India for rupee expenditure. A number of persons have told me that they are likely to bring it back to India for rupee expenditure, I hope they will bring it back,'' he said.

Mr Chidambaram said idea (easing of ECB norms) is that those who have raised money in the past in rather restrictive regime and those who will raise money today onwards under the liberalised regime should bring back money into India as early as possible. - PTI

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