FICCI has expressed disappointment that the central bank, in its credit policy announcement today, has held back its activism in further pruning the repo and reverse repo rates at a time when, by its own admission, inflation was expected to moderate to 3% by March this year. This was clearly a window of opportunity, as it would have served to further stimulate the confidence building measures initiated by the government and the RBI in the recent past, the chamber said in a statement. FICCI still urges the RBI to give a further signal to the banks who still remain risk-averse.
While FICCI welcomes the extension of the liquidity support to Mutual Funds and Housing Finance Companies from March 30 to September 30, 2009, the chamber had hoped that this support would be extended to March 2010 to enable the lending agencies to plan their activities with greater market certainty.
As regards CRR, FICCI had hoped that ratio would be reduced by at least 100 basis points to infuse more liquidity into the system thereby pushing the banks to be liberal in extending credit. It would also have enabled businesses to bring viable projects on the table.
