Our Bureau

New Delhi, April 11: THE Associated Chamber of Commerce and Industry of India (Assocham) has asked the Reserve Bank of India (RBI) to cut the bank rate and the Cash Reserve Ratio (CRR) by one per cent.

In a note to RBI on the eve of slack season Monetary and Credit Policy to be announced on April 19, Assocham has suggested that the policy should use moral suasion to advise banks to soften the interest rates, besides giving preferential treatment to small and medium enterprises.

The chamber said pre and post-shipment export finance should be fixed at seven per cent so as to give competitive edge to exporters. The existing rates are in the range of 10 - 12 per cent.

A press release issued by the chamber said, there is a need for a mechanism to provide adequate finance to boost housing construction activity. As bank’s exposure to construction activity is just 1.5 per cent of gross bank credit, this needs to be suitably increased, it said.

The chamber has pointed out that shelter under outmoded Tandon and Chore committees’ norms and asset and security-based systems of collateral should be phased out for housing and construction activities.”

According to Assocham, banks should come with new forms for lending on cash flow basis in tune with international banking practice, instead of static interest rate for all borrowers. Assocham said RBI should adopt a flexible norms for bank finance to information technology sector without the hassles of collateral and securities.