Interest rate cut recommended by Industry lobby

Interest rate cut recommended by Industry lobby With the aim to support the economy in the times of financial crisis, a set of recommendations, including further cut in key interest rates were planned on Sunday by the leading industry body, the Confederation of Indian Industry (CII). 

A statement issued by the chamber said, "It is necessary to further reduce repo rate by at least 50 basis points and in CRR (cash reserve ratio) by 150 bps to ensure adequate liquidity and reasonable cost of funding."

The statement also specified, "In addition, there is a requirement for provisioning of liquidity to mutual fund and NBFC (non-banking financial company) sectors, to enable orderly operation of financial markets." 

Other than this, in order to maintain depositor confidence in the banking sector, the CII also recommended the government to assure all bank deposits for a two-year period. 

Four specific suggestions were made by the CII on account of the depreciating rupee. These suggestions included, focused exchange rate management to avoid volatility without plummeting rupee liquidity, recreation of foreign investment norms, utilization of foreign exchange reserves in order to meet foreign currency needs and elimination of the cap on non-resident external and foreign currency non-resident deposits.

The vanishing of credit in the system is the key problem being faced by the industry. A special corpus fund has also been recommended by CII in order to lend to small and medium enterprises and speedy release of government funds for a variety of projects.