Assocham calls for lower rates for agro, infra projects

March 22nd, 2009 - 4:08 pm ICT by IANS  

New Delhi, March 22 (IANS) A leading industry lobby Sunday urged the country’s central bank to lower prime lending rates (PLR) for agriculture and infrastructure projects to 10 percent from the current 15 percent to help economic expansion.
A list of recommendations sent to the Reserve Bank of India (RBI) governor by the Associated Chambers of Commerce and Industry (Assocham) also called for a further slash of 50 basis points in repo, reverse repo and cash reserve ratios.

“Demand stimulation, jobs creation and expansion of economic activities would be absorbed under current economic circumstances provided the RBI lowers the PLR by at least 4-5 percentage points,” Assocham president Sajjan Jindal said.

According to him low PLR would attract more public investments and will encourage banks and other financial institutions to raise lending.

“This will automatically generate economic expansion in terms of capacity enhancement and creation of jobs and push up demand and consumption,” he added.

The industry lobby said there was enough liquidity in the system now, but the banks were not ready to lend to the small and medium sector.

“On the contrary, the banks are fearlessly lending to companies with AAA ratings (highest credit rating),” it added.

A further cut in key rates by the RBI, would make interest rates affordable for homes, cars and other consumer durable products that would spur demand in the market, Jindal said.

The Assocham has also advised the apex bank to bring down statutory liquidity ratio (SLR) to 20 percent from 24 percent.

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