Sunday, December 7, 2008

India Inc feels that the steps announced by RBI are not enough to revive core sectors like steel, cement, auto and power

Seshagiri Rao, director (finance), JSW Steel:

"The RBI should have also announced cuts in SLR (statutory liquidity ratio) and CRR (cash reserve ratio) to inject liquidity into the system. Steps announced are not big enough to induce a revival. We were expecting a steeper cut of 2% in the reverse repo rate" (RBI announced a 100 basis points cut in repo and reverse repo rates.)
A revival in core sectors will happen only after there is enough liquidity in the system which will make banks less tight-fisted.

Adi Godrej, chairman, Godrej group:

"I would have preferred a deeper cut of 150 bps"

FICCI:

RBI effort - "a good start in the correct direction".
Let us hope that sluggish commercial banks would cut their lending rates following the steps taken by RBI.
Disappointed that there is no major succour for the automobiles and the white goods sector.

Sajjan Jindal, president, Assocham:

Let us hope that the money will flow into the system to support the projects that have been put on hold.

DD Rathi, whole time director and CFO, Grasim Industries:

"In principle, the direction appears to be softening of interest rates and boosting liquidity. However, what is needed is a change in recovery laws which will speed up the decision making process while dealing with defaults. This will enable banks and other financial institutions to lend."

In the past, banks have been stuck with sticky assets because of defaults on borrowings. The slow process of recovery has prompted defaulters to take recourse in reschedulement of loans, rollovers and bailout packages. "The system today is too slow, which explains why banks are hesitant to lend to risky sectors," said Rathi.
-The Times of India

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