Pressing for removal of interest rate cap on non-resident (NR) deposits to deal with the problem of forex liquidity in the system,industry chamber CII said RBI decision to relax external sector norm will give right signals to the industry.
"The problem is of sentiments overtaking events and therefore the RBI's response to the emerging market needs of industry sends out the right signals," CII President K V Kamath said in a statement.He added, "CII had suggested that the interest rate cap on FCNR (B) and NRE deposits be removed and the banks be allowed to decide these rates...we feel that the removal of the cap is what is called at this juncture."
CII said the central bank's move to allow housing finance companies to avail of foreign currency borrowings and buy-back and pre-payment of foreign currency convertible bonds would be very useful for the real estate sector.The Reserve Bank yesterday announced a slew of measures, including permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits.
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