New Delhi, Nov 18 (UNI) Even as the government has pumped in huge liquidity in the financial system to reduce pain of the global financial crisis on Indian economy, an industry chamber has come out with its own set of suggestions to pump-priming capital markets facing depressed sentiments.
Assocham suggested setting up of market stabilisation fund(MSF) or special purpose vehicle (SPV) to help India Inc face the ongoing crisis.
In a representation to the Union Finance Ministry and Reserve Bank, it said institutions like Life Insurance Corporation and RBI should contribute to MSF.
The fund should be managed by an asset management company manned by senior functionaries and experts, including private sector, Assocham said.
Corporates should be allowed to access the fund at times of crisis to enable them increase their stake in their corporations as also to ensure smooth and suitable flow of equity into capital market,it said.
This, the apex chamber said, becomes necessary when investment bankers do not lend money to corporates at market rates for expansion, including increasing equity in their respective companies.
Alternatively, Assocham proposed the government to set up a special purpose vehicle (SPV) which can extend long term funding to promoters with an option to seek repayment of loan along with agreed yield or to convert the loan into shares of operating company on maturity.
Pointing out that current gloomy global scenario has created unnecessary pains on the Indian economy, it said Indian Inc. will appreciate if its suggestions are considered by key policymakers like Ministry of Finance, RBI, SEBI to proactively working towards solutions required to alleviate the pains.
If implemented, Assocham said, these measures will go a long way in supporting industrialists to create a better investment environment and more jobs in the country. It will also provide necessary tools to promoters willing to consolidate their holding in listed companies by increasing their stake.
Assocham said it will also provide a legitimate window of opportunity to promoters to stand against free fall of the stock and help stimulate investors' confidence and facilitate long term stability to capital markets.
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