The Confederation of Indian Industries and National Commodity and Derivative Exchange today welcomed the announcement made by Reserve Bank of India Governor Y V Reddy on the occasion of release of the First Quarter Review of Annual Statement on Monetary Policy for the Year 2007-08. The CII had earlier suggested that the Reserve Bank of India should consider desisting from increasing headline interest rates any further since that may be detrimental to the medium term growth prospects of the economy.
The unchanged Repo, Reverse Repo and Bank Rates are very welcome, and the 50 basis points increase in CRR would suck out excess liquidity from the system, said the CII.
However, the CII and said Federation of Indian Chambers of Commerce and Industry (FICCI) said that the Small and Medium companies will find it very difficult to access funds in this kind of a monetary environment, since effective rates and availability of bank credit are an issue for them.
"The increase in CRR will obviously has a element of impacting the investment capital formation and growth," said FICCI Secretary General Amit Mitra.
The Government bond yields rose sharply. The yield on the 10-year bond was at 7.87 per cent soon after the policy review, 12 basis points higher than before the review was released and up from previous close of 7.76 per cent.
The Bombay Stock Exchange indices fell sharply into negative territory after the central bank raised the cash reserve ratio for banks, knocking shares in banks and auto makers on concerns credit would become tighter, but then pared its losses.
The Sensex soared by 290 points with almost all indices showing positive signs.
No comments:
Post a Comment