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To ease liquidity, India Inc wants RBI to cut CRR and repo rate

Our Bureau Mumbai | Updated on January 17, 2019 Published on January 17, 2019

BL24_04_SHAKTI   -  PTI

India Inc on Thursday appealed to  the RBI  to take measures that will ease liquidity and lower interest rates for reviving the investment cycle and supporting growth.

Industry bodies such as the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry (Assocham) met RBI Governor Shaktikanta Das in this regard.

The CII suggested at least a 50 basis points cut in the cash reserve ratio (CRR) to ease the tight liquidity situation, reduction in the repo rate by 50 basis points to address the high cost of credit and measures to facilitate the flow of credit to the industry, especially to micro, small and medium enterprises (MSMEs) and the infrastructure sector.

The CII delegation comprising, among others, Uday Kotak, President-Designate, and Adi Godrej, Past President, pointed out that  various in-house surveys conducted by the Confederation recently revealed a positive outlook on both topline and  bottomline fronts. Yet, they  were cautious on industry performance due to factors such as  liquidity crunch, delayed payments and subdued consumer demand.

On measures to address the financial challenges faced by  MSMEs, the CII suggested that the central bank  should consider limiting the collaterals sought by banks to 133 per cent of the exposure and eliminate the need for personal guarantees where sufficient collateral has been provided.

The industry body also suggested that the Letter of Undertaking (LoU) for buyers’ credit be allowed in  cases where MSMEs are investing in expanding capacity. The central bank may consider allowing banks to sanction buyers’ credit facility to MSMEs, wherever raw materials is being imported under a Letter of Credit.

Published on January 17, 2019
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