|HOME | BUSINESS | REPORT|
|April 16, 1999||
IMC calls for cut in interest rate on export finance
The IMC has sought a cut in interest rate on export finance and greater autonomy for banks. The IMC said that reduction in CRR would encourage banks to be more liberal in lending to the business sector and thereby would reduce the impact of recession.
Similarly, further reduction in interest rate, which is justifiable in terms of the falling inflation rate, would help Indian business to manufacture and export at globally competitive prices.
The IMC, however, is against depreciation of the rupee. What is required now is creation of external demand for Indian products and promotion of strong Indian brand images abroad, it said.
The RBI's credit policy should also aim at making the debt market more liquid, as it is particularly important to corporates seeking to expand their operations. At present, industrial holdings share in government securities amounts to a paltry two per cent.
There is need for increasing innovative debt instruments that are investor-friendly. The debt market needs to be widened and made deeper.
Lastly, the credit policy should also initiate certain measures for enhancing the liquidity of large gold reserves in the country in continuation with the steps announced in the Union Budget.
The IMC felt that the RBI should cast light on its own policy stance on India's progress towards universal banking. A programme designed to speedy movement towards universal banking is needed, because the stand-alone financial institutions will find it increasingly hard to find good assets if they are borrowing at 14.5 per cent or 15 per cent. The RBI should also take steps to create assets reconstruction funds and securitisation of non-performing assets for creating a secondary market in discounted debts.
What we require from the RBI is a directional policy statement on how it proposes to meet global norms of banking in critical aspects such as provisioning and capital adequacy.
|Tell us what you think of this report|
BOOK SHOP | MUSIC SHOP | HOTEL RESERVATIONS | WORLD CUP 99
EDUCATION | PERSONAL HOMEPAGES | FREE EMAIL | FEEDBACK