Breaking News

You are here » Indian-Commodity  :  Economy  :  ASSOCHAM flags concerns on liquidity crisis; seeks measures from RBI


ASSOCHAM flags concerns on liquidity crisis; seeks measures from RBI

Raising concerns over recent liquidity crisis in non-banking financial companies (NBFC), the industry chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has stated that the Reserve Bank of India (RBI) should provide a liquidity credit line of Rs 30,000-40,000 crore to non-banking financial companies (NBFC) as a temporary relief from tight liquidity conditions.

The chamber's Secretary General Uday Kumar Varma said such steps were essential in view of the current 'liquidity crisis' faced by the Indian economy. He also voiced industry concerns and the growing unease among investors and businesses at large. Varma observed that in view of the liquidity challenges, monetary policy easing by way of lowering interest rates would give the necessary boost to investor confidence. He highlighted that due to the various factors that have triggered this liquidity crunch, beginning with the IL&FS default and measures to keep the rupee from depreciating further, the money markets have seen higher costs of borrowing capital.

Seeking urgent attention to the crisis, Varma appealed for immediate measures to infuse liquidity into the system by RBI. Varma reiterated the need for decisions to be guided by public interest and the requirements of the Indian economy, given that there are multiple trade influences and factors. He highlighted that while the government continues to undertake favourable measures and its progressive policies have catapulted India to the 77th rank in Ease of Doing Business, certain segments such as NBFCs and micro, small and medium enterprises (MSMEs) have been affected by the liquidity crisis. He said this warrants serious attention, given the fact that NBFCs being the strong link between the banks and the MSMEs are under serious stress.

ASSOCHAM noted that for India to transition from being a developing to a developed economy with commensurate norms, it is pertinent that growth of 7-9% be maintained to improve per capita income. It added that this calls for a radical shift towards flexible policies amidst a conducive environment, rather than continuing on a stringent regulatory path. Referring to the demand for a credit line to NBFC's, the chamber said this would provide a fillip to MSMEs and other areas such as infrastructure, employment generation, labour, manufacturing, FMCG, steel and cement consumption, which in turn will create a positive cascading effect leading to employment generation.

Related News

View all news

RBI's board to set up expert committee to examine ECF

The Reserve Bank of India's (RBI) Board meeting concluded on a cordial note. In the high profile meeting, which came amid the differences between the government and the RBI, the board agreed to ease liquidity......

RBI to infuse liquidity worth Rs 8000 crore through purchase of G-secs under OMO

Amid recent liquidity concerns, the Reserve Bank of India (RBI) has decided to infuse Rs 8,000 crore through purchase of the government securities (G-secs) under Open Market Operations (OMO) on November......

Investments through P-notes hit over 9-year low of Rs 66,587 crore in October

The share of foreign portfolio investments (FPI) through participatory notes (P-notes) in domestic capital markets has declined to nine-and-a-half year low of Rs 66,587 crore at the end of October. According......

Top News

View all news

Megastar Foods planning to incorporate subsidiary

Megastar Foods is planning to incorporate a subsidiary Company. The meeting of the Board of Directors of the company is scheduled to be held on November 27, 2018, to consider the same. Megastar Foods is......

Lupin launches generic Tetrabenazine Tablets

Lupin has launched Tetrabenazine Tablets, 12.5 mg and 25 mg having received an approval from the United States Food and Drug Administration (USFDA) earlier. Lupin's Tetrabenazine Tablets, 12.5 mg and 25......

UPL's arm signs definitive agreement to acquire entire stake of IBC

UPL's wholly owned subsidiary-- UPL Corporation, Mauritius has signed a definitive agreement to acquire directly or through its subsidiaries 100% of the shares of INDUSTRIAS BIOQUIM CENTROAMERICANA, SOCIEDAD......