CII has taken careful note of the continued tight stance of the RBI on the monetary policy, said a Press Release issued. The policy review is on expected lines said the release.
The Apex Industry Association 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 CII.
With high inflow of foreign capital into the economy, and the liquidity situation being healthy, the removal of the cap of Rs 3000 crores on daily reverse repo (overnight borrowing) transaction, would help manage volatility in the call money rates, and additionally suck out excess liquidity observed CII.
However, CII had one word of concern, about the tight monetary regime, pointing out that Small and Medium companies 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 Press Release also said that CII is watching the inflation situation very closely and particularly the commodity prices.
The apex Association has expressed hope that over the next few months if commodity prices come down further and the overall figure for inflation reduces, the RBI would not wait till the 30th of October to indicate a softening of its stance on the monetary policy.
Confederation of Indian Industry
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