India Inc lobbies for interest subvention
The Financial Express, April 10, 2009, Page 1
Economy Bureau, Mumbai
Indian industry on Thursday asked the Reserve Bank of India to relax the sectoral cap for group exposure by banks. It also asked for special interest rates for sectors such as automobiles and housing.
Emerging from a meeting with central bank governor D Subbarao, Ficci president Harshpati Singhania said, “Even infrastructure projects such as Delhi Airport are finding it difficult to source funds at appropriate rates. If interest rates cannot be brought down across the board, then the government can perhaps consider offering interest subvention to sectors like automobiles, housing and consumer durables.”
Captains of Indian trade and industry have also demanded a further cut in interest rates and a greater flow of funds to boost economic activity across sectors—commercial, infrastructural and retail.
Naresh Takkar, managing director of credit rating agency Icra, said discussions with RBI mainly revolved around issues like the cost of funds at the moment and challenges related to raising equity funding in the current situation. As equity has become difficult to raise (in the current quarter, not a single new issue has been launched in the primary market), companies are crowding the debt window of banks, where costs are proving to be increasingly prohibitive. RBI data shows that prime lending rates are between 12.25% and 11.50%.
Members of prominent trade and industry bodies like CII, Ficci and Assocham, representatives of credit rating agencies, as well as chief financial officers of prominent companies met Subbarao as part of a series of such interactions that RBI has been holding before announcing its annual credit policy at the end of the month. RBI officials met with bank chiefs on Wednesday, wherein the latter said deposit rates needed to be scaled down for lending rates to be clipped.
Singhania said Subbarao assured them he would look into the various suggestions made by industry. Corporate India has claimed that though RBI has taken a series of measures that released Rs 3.9 lakh crore of additional liquidity into the system through several rate cuts totalling 400 basis points, the benefits have not yet reached industry, including SMEs and non-banking finance companies.
“We want RBI to ensure both pull and push factors for both corporates and retail investors. Banks are not passing on the benefits of the recent measures by RBI,” Singhania said, adding that despite inflation falling practically to zero, rates remain in double digits deterring corporate investment and demand from retail investors.
The Financial Express, April 10, 2009, Page 1
Economy Bureau, Mumbai
Indian industry on Thursday asked the Reserve Bank of India to relax the sectoral cap for group exposure by banks. It also asked for special interest rates for sectors such as automobiles and housing.
Emerging from a meeting with central bank governor D Subbarao, Ficci president Harshpati Singhania said, “Even infrastructure projects such as Delhi Airport are finding it difficult to source funds at appropriate rates. If interest rates cannot be brought down across the board, then the government can perhaps consider offering interest subvention to sectors like automobiles, housing and consumer durables.”
Captains of Indian trade and industry have also demanded a further cut in interest rates and a greater flow of funds to boost economic activity across sectors—commercial, infrastructural and retail.
Naresh Takkar, managing director of credit rating agency Icra, said discussions with RBI mainly revolved around issues like the cost of funds at the moment and challenges related to raising equity funding in the current situation. As equity has become difficult to raise (in the current quarter, not a single new issue has been launched in the primary market), companies are crowding the debt window of banks, where costs are proving to be increasingly prohibitive. RBI data shows that prime lending rates are between 12.25% and 11.50%.
Members of prominent trade and industry bodies like CII, Ficci and Assocham, representatives of credit rating agencies, as well as chief financial officers of prominent companies met Subbarao as part of a series of such interactions that RBI has been holding before announcing its annual credit policy at the end of the month. RBI officials met with bank chiefs on Wednesday, wherein the latter said deposit rates needed to be scaled down for lending rates to be clipped.
Singhania said Subbarao assured them he would look into the various suggestions made by industry. Corporate India has claimed that though RBI has taken a series of measures that released Rs 3.9 lakh crore of additional liquidity into the system through several rate cuts totalling 400 basis points, the benefits have not yet reached industry, including SMEs and non-banking finance companies.
“We want RBI to ensure both pull and push factors for both corporates and retail investors. Banks are not passing on the benefits of the recent measures by RBI,” Singhania said, adding that despite inflation falling practically to zero, rates remain in double digits deterring corporate investment and demand from retail investors.
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