Merchants’ Chamber of Commerce
Shri S.S.Beriwala, President, Merchants’ Chamber of Commerce has voiced his concerns over the 0.25p.c. increase in both Repo rate and Reverse Repo rate, which will move up to 6.25p.c. and 5.25p.c. respectively under the Liquidity Adjustment Facility. The apparent objective of RBI is to tame the WPI Inflation which has slowed down to 8.6p.c. as on today vis-à-vis 11.2p.c. in last April.
But Shri Beriwala feels that some action has been already taken on this front, and liquidity is already very tight in the market. Short-term interest rates have risen from 3.75p.c. in May to 7p.c. now, and 3-month CP costs 8.4p.c. compared to 4.7p.c. in May 2010. Most of the banks had also raised their deposit and lending rates. As such, he apprehends that this rate increase again carries the risk of stoking up global interest in exploiting the interest differentials, and raising the current level of capital inflows which might be hurting our export-growth.
Shri Beriwala also expressed his concern at the introduction of a ceiling on “loan to value” ratio for housing loans, at 80p.c. maximum, which would act as a dampener. The clamping down on ‘Teaser home loan rates’ and increasing the Risk-weightage for housing loans above 75 lakh will also impact the cost of borrowing.
Shri Beriwala welcomed the circular issued by the RBI for credit flow to MSMEs to the tune of 60p.c. as recommended by the High Level Task Force and felt that this norm should be strictly followed by the banks, and monitored by RBI.
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