Expect more steps to ease liquidity: FM

News Flash

For full coverage of Budget 2009, log on to Budget.ndtv.com
CUTS BPLR BY 25 BPS TO 12% WITH EFFECT FROM JULY 25
EUROPEAN MKTS DROP FOR 3RD STRAIGHT WEEK; DAX DN 1.4% FOR THE WEEK
SMS BOS < space > stock query at 56388
RIL MOVES SUPREME COURT CHALLENGING BOMBAY HIGH COURT JUDGEMENT
RIL ALLEGES THAT BOMBAY HC ERRED IN DECIDING QUANTITY, TENURE, PRICE OF GAS
RIL MOVES SUPREME COURT CHALLENGING BOMBAY HIGH COURT JUDGEMENT
RNRL FILES PETITION IN SC SEEKING MODIFICATIONS TO BOMBAY HC ORDER
RNRL ASKS SUPREME COURT TO DIRECT RIL TO IMPLEMENT BOMBAY HC ORDER
For midnight delivery of gifts log onto NDTVgifts.com
Free shipping in 500 cities. Log onto NDTVgifts.com
Surprise your loved ones with flowers.log onto NDTVgifts.com
Email us at buyorsell@ndtv.com
Call us at 011-26201171
CLB ORDER IN THE MATTER OF MAHINDRA SATYAM EXPECTED ON MONDAY
OPEN TO 1-2 GOVT NOMINEES TO BE RETAINED FOR INVESTIGATION PURPOSE
MAHINDRA SATYAM BOARD HAS WRITTEN TO CLB TO RECALL GOVT NOMINATIONS
BHARTI GETS INTERPRETIVE ORDER FROM SEBI ON WAIVER OF OPEN OFFER
ORDER CONDITIONAL ON BHARTI GETTING NOD FOR SCHEME OF ARRANGEMENT BY HC
BHARTI WILL NEED SHAREHOLDER APPROVAL FOR SCHEME OF ARRANGEMENT
TATKAL BOOKING PERIOD REDUCED TO 2 DAYS FROM 5 NOW
TO FORM EXPERT COMMITTEE FOR OPTIC FIBRE CABLE NETWORK
PROVISION FOR NEW LINES AT RS.2921CR FROM RS,1100CR
RECEIVED INCREASED BUDGETARY SUPPORT BY RS.5000 CR IN FY'10
MAMATA BANERJEE: ECONOMIC VIABILITY OF PROJECTS IS NOT THE KEY CONCERN
ANNUAL PLAN OUTLAY OF RS.40,740 CR IN FY10
TO DEPLOY RS.15675 CR VIA INTERNAL RESOURCES
RAILWAY FINANCE CORP TO BORROW RS.9000 CR IN FY'10
FY'10 GROSS TRAFFIC RECEIPTS SEEN AT RS.8842 CR
EXPECT RS.58500 CR REVS FROM FREIGHT, RS.23400 FROM PASSENGERS IN FY'10

Updated: 10/10/2008 | 07:50 PM IST

Top Stories

Press Trust of India

Friday, October 10, 2008 (New Delhi)

Blog

Comments:

Read (0)

Post

Rate the story

Unfazed by the global financial crisis, Finance Minister P Chidambaram on Friday asserted that fundamentals of the Indian economy are strong and that savings in banks are "completely safe".

Earlier, as the stock market crashed under the pressure of global meltdown and the RBI cut the CRR by 1 per cent, the Finance Minister promised to address liquidity and other concerns of the economy.

He also announced the decision to constitute a group consisting of top bankers headed by Finance Secretary Arun Ramnathan, who is also Secretary (Financial Services) to make a quick assessment of the requirements of the liquidity and advise the government accordingly.

"Credit is the lifeline of trade, commerce and business and, hence, it is important that credit continues to flow to all sectors of the economy. In consultation with RBI and other regulatory authorities, government will address the liquidity and other concerns about the economy," Chidambaram said in a statement.

"It is also important to maintain our confidence in the Indian economy. As the Cabinet noted on Wednesday, the fundamentals of our economy are strong and there are many indicators which affirm the sound fundamentals," he said in the statement, released by the Finance Secretary.

Chidambaram, who is believed to have rescheduled his trip to Washington for attending the meetings of IMF-World Bank and G-20 leaders on the global crisis, stepped in after the BSE Sensex crashed by about 1100 points this morning. Prompt action by RBI and Chidambarm's statement helped a substantial recovery but the selling pressured emerged to leave the market volatile.

"I have requested the group to begin work immediately, also visit Mumbai and submit an interim report within a week," the Minister said.

Reacting to the measures, bankers said that though liquidity would remain a problem, interest rate may come down.

The Ramanathan group includes representative of RBI, TS Narayanaswamy, Chairman Indian Banks Association and CMD of Bank of India, UK Sinha, CMD UTI, Y M Deosthalee, CFO of L&T and Director Incharge of L&T Finance Ltd and R M Malla, CMD of SIDBI. The group has been authorised to coopt more members, if necessary.

Chidambaram welcomed the RBI decision to reduce the CRR by 100 basis points, thus making a total reduction of 150 basis points (since Monday) to inject a total of about Rs 60,000 crore into the banking system to avert a credit crunch.

"I welcome the decision of RBI. The Governor, RBI, has also assured the government that the RBI is keeping a close and continuous watch on the situation and will take appropriate steps according to the evolving situation," the Minister said.

He said that the group was set up following representations from banks, other financial entities and intermediaries, corporate, and small businesses that the issue of liquidity "must be addressed in a comprehensive manner".

"There have impressed upon me that intermediation of credit must take place smoothly and efficiently," he said. He recalled that on Wednesday the Cabinet reviewed the financial situation in India and authorised him to issue a statement on behalf of the government.

"We have identified that the main problem is liquidity and we have assured the people that we will respond swiftly and take steps to infuse more liquidity according to the needs of the situation. RBI was advised to take appropriate steps in this behalf," Chidambaram said.