Liquidity concerns to be addressed: Group to look into credit needs

New Delhi, Oct 10 (UNI) Giving a categorical assurance that the government and RBI will address the liquidity problems being faced by the system, Finance Minister P Chidambaram today announced constitution of a high-powered group to look into the credit needs of various sectors.
Mr Chidambaram also lauded the steps taken by the Reserve Bankof India(RBI) to pump liquidity by twice consecutively cutting down the Cash Reserve Ratio (CRR)
A statement read out by Finance Secretary Arun Ramanathan on behalf of the Finance Minister took note that the RBI had cut CRR by 50 basis points on October 6, 2008, and this morning a further reduction in the CRR by 100 basis points, thus making a total reduction of 150 basis points.
As a result of the 150 bps reduction in CRR an amount of about Rs 60,000 crore would be released into the system.
''I welcome the decision of the RBI. The Governor, RBI has also assured the Government that the bank is keeping a close andcontinuous watch on the situation and will take appropriate steps according to the evolving situation,'' Mr Chidambaram said.
Mr Chidambaram said he had received a number of representations from banks, other financial entities and intermediaries, corporates and small businesses that the issue of liquidity must be addressed in a comprehensive manner. He said they have impressed upon him that intermediation of credit must take place smoothly and efficiently.
The Finance Minister said he has, therefore, decided to constitute a group to make a quick assessment of the requirements of liquidity and advise the Government.
The group is to be headed by Mr Ramanathan, who is also Secretary (Financial Services).
The other members of the group are; A representative of RBI; Mr T S Narayanaswamy, Chairman, IBA and CMD, Bank of India; Mr U K Sinha, CMD, UTI; Mr Y M Deosthalee, CFO, L&T and Director-in-charge, L&T Finance Limited; and Mr R M Malla, CMD, SIDBI.
The Group has been authorised to co-opt any more members, if necessary.
Mr Chidambaram said he has requested the group to begin work immediately, and also visit Mumbai, and submit an interim report within a week.