Chidambaram says RBI to release Rs 25,000cr for banks immediately

New Delhi, Oct 15 : Finance Minister P Chidambaram has announced that the Reserve Bank of India will immediately release Rs 25,000 crore to commercial banks, cooperative banks and RRBs under the farm loan waiver scheme.

He also announced doubling of the investment limit to six billion dollars for foreign institutional investors in corporate bonds.

The series of announcements came on a day when stock markets tanked, with the benchmark Sensex losing 674 points, reversing the two-day winning streak.

Chidambaram, who along with RBI Governor had briefed the Prime Minister last night on the measures taken so far while exploring the other options, said the measures so far have helped improve liquidity and it has been felt that more steps are needed.

"The government also decided to provide banks access to finance for raising their capital adequacy ratio to 12 per cent by a suitable date in the future from the current level of 10-12 per cent," Chidambaram told reporters here.

Identifying liquidity as the main problem, which has constrained the financial system, the government also decided that RBI would immediately release to lending institutions the first instalment against their outgo on farm debt waiver scheme.

RBI will provide Rs 7,500 crore to commercial banks and Rs 17,500 crore to NABARD as the first instalment against the payment towards debt relief scheme.

ANI