India acts to avert liquidity crunch


India’s central bank took emergency measures at the weekend to avert a growing liquidity crunch affecting the country’s estimated $43.7bn of outstanding trade finance.

Blocked trade credit is threatening to bring productive sectors of the economy to a standstill, particularly small and medium-sized businesses that are unable to fall back on large balance sheets.

Citi has singled out India’s $43.7bn (€34.7bn, £30bn) of trade credit as a particular “problem area”. The Reserve Bank of India is also increasingly concerned about the country’s outstanding short-term corporate sector foreign debt of $82bn.

The RBI on Saturday night more than doubled the funds it makes available for banks to refinance export credit at favourable interest rates to Rs220bn ($4.5bn, €3.8bn, £3bn).

It also extended the export credit repayment window for exporters to nine months from six months.

“There are indications that the global slowdown is deepening with a larger than originally expected impact on the domestic economy,” the RBI said.

The move came as the Asian Development Bank on Sunday appealed to Asian banks to unfreeze credit to customers, saying financial institutions had overreacted to the effects of the global financial crisis in the region

via FT.com / Asia-Pacific / India – India acts to avert liquidity crunch

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About zyakaira

Investment Banker, 40s, Bangalore This Biopic and this web recreates how one point of view, one person can impact a tremendous economic engine that the world thrives and mis-thrives on. This one has the knowledge and the civil sense , the art of conversation and some good writing to mentor others as powerful and help global managers develop and fine tune their approach on US markets, China, India and the world. Read on here, and let me know what you need. It can be a race for TRPs, a race for new markets and a race to do what is right. I have the pulse of the crisis, the recovery and the market direction and can help you build and refine your strategy as i have helped thousands of managers and multiple global corporations. Of course, it’s more fun if you talk to me. I am in favor of leading this moving of the economic crisis and will partner with you in a soft and subtle way, just the way we both ride to the top. But you can write with us, opine and just reply with aplomb and shine on Twitter , 4 square , Facebook and any other social “choupal” of choice via zyaadakairaada Profile & Portfolio - SocialPicks Different flavours at: http://benchilibowl.wordpress.com http://zyaada.mp

Posted on November 18, 2008, in Bank Stocks, CRR, Financial Markets, India, Investments and tagged , , , , , , . Bookmark the permalink. Leave a comment.

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