Chamber Calls For Funds Supply At Reasonable Cost

The chamber has asked for an innovative and radical credit policy for the current busy season. Chamber president PK Rajgarhia has said the monetary authorities should create a supportive environment and increase money supply by 17 per cent.

Rajgarhia has advocated the reduction of statutory liquidity ratio (SLR) and cash reserve ratio (CRR) by at least 2 to 3 per cent to inject adequate liquidity in the system.

He has said the cost of lending should be in tune with international market practice, where it is about 3 per cent over the inflation rate or 2 to 3 per cent above the cost of funds.

 

Rajgarhia has suggested that in order to activate the capital and debt market, the government and the Reserve Bank of India (RBI) should allow banks to provide finance against shares without any limit and provide finance to non banking financial companies (NBFCs). He has also advocated a review of the ban on bridge loans and discounting facilities.

The chamber has said that both pre-shipment and post-shipment credit schemes should be made available to exporters upto 180 days on softer terms to enable them to face global competition.

Rajgarhia has also suggested that financial intermediaries should be told to introduce corporate/special loan schemes to meet genuine working capital requirements that would enable corporates to tide over their transitional problems. Banks should be encouraged to formulate area specific schemes and give more emphasis on production finance, he has said.

The chamber has suggested that banks may be permitted to extend the facility to finance against shares to finance companies.

It has also called for relaxation of norms for investment by banks in shares, particularly in the secondary market.

It has suggested that the monetary authorities should estimate the total requirement and availability of the funds to be commensurate with industrial growth and initiate periodical steps wherever there is a shortfall in one or more sources of supply of funds.