New Delhi, Nov 1 (UNI) India Inc today gave a thumbs up to the Central Bank's decision to undertake another round of drastic measures to ease liquidity in the financial system, including reducing repo rate by 0.5 per cent, CRR further by one percentage point and SLR by one per cent, saying this will have a positive impact on growth at a time when early signs of a global recession are on the horizon.
After leaving the key rates unchanged in its recent credit policy review, the Reserve Bank this morning reduced these key rates, which are expected to bring down interest rates.
The chambers described these steps as ''timely'', coming on the back of a sharp increase in the overnight lending rates and serious concerns about the availability of credit at reasonable rates to various segments.
The chambers expressed the hope that commercial banks will now take the cue from the Central Bank's policy measures and lower lending rates.
Significantly, Finance Minister P Chidambaram is slated to meet Public Sector Bank's CEO's on Tuesday.
He will take up the issue of recent liquidity enhancement measures, credit flow to corporate India, NBFCs and Mutual Funds and housing finance companies.
FICCI President Rajeev Chandrasekhar said RBI moves signal ''attention shifting to growth'' and ''banks must now cut interest rates and credit must flow to industry with immediate effect.'' Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said along with these measures, the RBI could also think of relaxing the restrictions on FII investment in the government debt market, so as to develop a new class of buyers for these securities.
Terming the RBI's steps as ''move on right path'', ASSOCHAM President D S Rawat said this will not only subside the interest rates but also bring enough liquidity into the market to help Indian Inc expand, diversify and modify its plans.
The chamber suggested that the CRR and repo rates should further brought down at 2004 levels.
PHD Chamber Secretary General Krishan Kalra said, these steps are indeed welcome measures towards striking an optimal balance between preserving financial stability and sustaining the growth momentum.
UNI MP GS AS1851