Industry wants further cut in interest rates

new delhi: if industry has its way, the credit policy to be announced by the reserve bank of india on 29 april will see further softening of interest rate in the country. in its submissions, while assocham has demanded 1 per cent reduction in the cash reserve ratio and discouraging of banks from excessive exposure in government securities by prescribing higher risk weightage for the statutory liquidity ratio (slr), phdcci has demanded 1 per cent reduction in bank rate, 2 per cent reduction in crr and 1 per cent reduction in slr. on the plr front, both the chambers have requested rbi to encourage banks to follow a soft interest policy. while assocham has called for moral suasion on part of rbi, phdcci has said that no bank should be allowed to fix its plr exceeding a ceiling prescribed by the rbi. as regards spread rates, phdcci wants it to be at a maximum of plr+2 per cent for any category of borrower. criticising the monthly compounding of interest rates from april this year, asso-cham has said that it would raise the effective rate of interest by 0.5 to 0.75 per cent and go counter against the soft interest rate policy. on the money market, assocham said that corporates’ excess short-term surpluses should be given the opportunity for short-term investments with reverse repo facility. the chamber also wants rbi to remove the 7-day cap for the acceptance of deposits by banks. the chamber has also requested the government to notify the exemption of stamp duty for secondary market transfer of corporate debt instruments (demat mode) to increase the share of debt. for the capital adequacy purpose, assocham has advocated a weighted slab for corporate bonds based on the credit-rating parameter. considering the importance of the service sector in the economy to promote employment and growth, assocham has requested rbi to advise banks to step up the level of credit to this sector. on export finance, assocham has demanded export finance to be treated as a ‘priority sector’ for all banks, while phdcci has demanded reduction in interest rate on export credit. further, it has demanded that rbi mark the prescribed maximum ceiling on export interest rate in absolute terms instead of linking the same with plr. phdcci wants increase in the exposure ceiling to the housing and construction industry from the current 1.5 per cent of gross bank credit to 5 per cent. on the commercial paper front, assocham has called for an expeditious decision for uniform duty across all states in india, removal of the anomaly in stamp duty between banks and non-banks as investors and notification on remission of stamp duty on demat-secondary transactions in commercial papers.