Raghuram Rajan must cut rates, expedite bank licences to boost growth: Ficci

NEW DELHI: Industry body Ficci today said newly-appointed RBI Governor Raghuram Rajan should lower interest rates, reduce CRR and SLR, strengthen corporate bond market, fast track issuance of new bank licences and float rupee bonds to provide a fillip to investments and boost economic growth.

"RBI should lower the interest rates at this juncture to enable a cut in lending rates by banks and thus stimulate corporate investments. Bank provisions for CRR and SLR should also be brought down to ease liquidity," Ficci Secretary General Didar Singh said.

The central bank should also strengthen the corporate bond market for long term funding to reduce the pressures on banks for long-term lending and to diversify the debt risk beyond banking system, he added.

Besides, to strengthen the banking sector, new bank licences should be issued at a fast pace to bring in greater competition and improve access to financial services by the masses, Singh said.

Shortly after taking over the reins of the RBI earlier this week, Rajan said the central bank plans to issue licences around January next year.

Besides, to arrest the sharp depreciation in rupee, RBI should consider floating rupee bonds for NRIs (non resident investors), he said.

"The costs of these (rupee bonds) should however be borne in mind and the tenure and rates of the bonds should be determined judiciously," Singh said.

The central bank should also consider removing all restrictions on interest rates on foreign currency deposits, he added.