Chambers seek growth boosting steps from Raghuram Rajan's RBI in key policy rates

PTI Posted online: Monday, Oct 21, 2013 at 0000 hrs
Mumbai : Industry bodies today urged the Reserve Bank of India (RBI) Governor Raghuram Rajan to reduce key policy rates and ease the tight liquidity conditions in forthcoming monetary policy review.

Governor Raghuram Rajan, who will unveil the policy next Tuesday, is not expected to trim policy rates.

In fact some analysts have called for a 25 bps hike in the repo rate in the wake of inflation going up in the past few months.

In a 10-point recommendations made to the Raghuram Rajan's RBI, as part of the wider body pre-policy meeting with the central bank, Assocham called for the need to provide impetus for investments to revive growth in the infrastructure sector, while realty players called for some concessional rates for home loans.

Talking to reporters after the customary pre-policy meeting with the RBI brass, city-based builder Hiranandani group head Niranjan Hiranandani said he urged the central bank to provide some fillip to the housing market by way of some special rates for home loans.

Industry body Assocham demanded that the apex bank look at widening financial markets by developing the municipal bonds market for funding of urban infra projects.

The other demands from Assocham include liberalising financial markets, availability of export credit, asset classifications and non-performing asset recognition, reduction in gold imports, amongst others.

Notably, the new RBI governor in his maiden policy last month unexpectedly increased the repo rate by 25 basis points to 7.50 per cent to contain inflationary expectations.

Rajan, however, reduced the marginally standing facility (MSF) to 9 per cent from 10.25 per cent in two tranches. Rajan's predecessor D Subbarao on July 15 had raised the MSF rate to 10.25 per cent to curb rupee's fall by tightening liquidity condition.

The market is not expecting an interest rate cut on October 29 as both retail and wholesale inflation have gone up since August.

Meanwhile, the Confederation of Indian Industry (CII), in the customary pre-policy meeting held today suggested that the RBI sends out a signal in the forthcoming policy there would be no further tightening and it would start to move to a more accommodative monetary stance.

CII has also suggested that a separate window be opened by RBI for SME financing to ensure the availability of credit at affordable rates to this important sector.

CII asked the RBI to consider forbearance for financing already made available to the infrastructure sector.