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Indian bankers

welcome RBI move

to ease liquidity

BOMBAY: Bankers, corporates and stockbrokers welcomed the Reserve Bank of India's initiatives on Wednesday to ease liquidity and to broaden the country's money and foreign exchange markets.

A cut in the cash reserve ratio (CRR) to 13 percent from 14 percent announced by the RBI would go a long way towards easing the liquidity crunch facing the banking system, they said.

"It's a step in the right direction," said Vishnu Deuskar, country treasurer of ABN-AMRO Bank. "It will ease liquidity."

On Wednesday, the RBI announced its credit policy for the first half of 1996/97 (April/March).

"For the first time, the Reserve Bank has accepted that there is a liquidity crunch," said Anil Singhvi, treasurer at cement firm Gujarat Ambuja Cement Ltd.

"Liquidity is also a perception," Singhvi said. "The one percent cut will change the perception," he said.

Bankers also welcomed the RBI move to allow corporates to invest in money market mutual funds.

D.R.K. Patnaik, general manager of SBI Funds Management Ltd, said the move to allow corporates to invest in money market mutual funds would give viability to the scheme which is yet to take off in India.

"Most of us have schemes ready. We are waiting for the right moment to hit the market. We would like the money market to stabilise before launching any schemes.

Stock brokers and investment analysts also welcomed RBI's announcements.

Sandeep Dixit, analyst at Peregrine Capital, said he was yet to study details of the proposals but said the release of funds because of reduced cash reserve and statutory liquidity requirements would be very positive for the industry.

Deuskar of ABN-AMRO Bank said RBI's move to allow select Indian banks to take positions in overseas cross currency markets would help deepen the Indian forex market.-Reuter