Srinagar, Apr 21: Valley’s apex industrial camber, the Federation Chamber of Industries Kashmir has expressed its disquiet over the hike the RBI announced in its short-term indicative lending and borrowing rates as well as cash reserve ratio (CRR).
 President FCIK Shakeel Qalandar said although the major banks had indicated not to raise the interest rates for the time being, yet based on the experience and precedence “they will hike the rates in future in view of the increase in the short term lending rates.”
 He said the increase in the borrowing rates may induce the banks to park more funds with RBI. “The increase in CRR is expected to mop up a whopping Rs 12500 crores from the system thereby affecting the flow of the funds in the market,” he said.
 To mention the RBI Tuesday effected a uniform 0.5 percentage point increase in its policy rates and CRR.
 Qalander suggested that should have been a rate cut in the interest by at least 100 basis points in order to release liquidity to the enterprises at a comfortable interest rate.
 He said such an initiative would have enhanced and encouraged the slowly recovering industry particularly in states like J&K.
 He said the inflation has shown a decline in past months and could further be moderated through increased productivity in food and non-food segments.
 Whereas the production of food grains could be increased through more and more technological interventions, the improved infrastructure and policy reforms would work as a booster for increased production in other sectors, he said adding that the RBI could have given a push to the system by infusing additional funds on softer interest rates.
 The president FCIK said that the enterprises in the state of J&K were in the most critical phase of revival and capacity consolidation and the hike by the central bank was likely to have a negative impact on the process.
 “It would also impact the fresh investments particularly in MSME sector besides capacity expansion programmes of the existing enterprises in the state,” he added.
 The president FCIK, however, expected that the banks operating in the sate would restrict from increasing the interest rates to the enterprises. “Besides, the banks should afford 50 per cent concession on service charges to the enterprises in J&K as per the guidelines of RBI for which the apex bank needs to monitor the implementations,” he said.
 He president FCIK said the RBI had not taken any measures in the monitory policy to encourage exports.

Lastupdate on : Wed, 21 Apr 2010 21:30:00 Makkah time
Lastupdate on : Wed, 21 Apr 2010 18:30:00 GMT
Lastupdate on : Thu, 22 Apr 2010 00:00:00 IST