The Confederation of Indian Industry (CII) has advised the country's banking and monetary regulator, Reserve Bank of India, to reduce some important policy rates by at least 0.5 percent in the upcoming monetary policy review. CII suggested that decrease in key policy rates is important for industrial growth and to restore investor faith.
CII is a non government, non-profit organization which works towards creating and maintaining industry growth in India, and making industry and government equal partners in the growth process by imparting advisory and consultative processes.
It should be noted that RBI will be announcing its Q2 credit policy review on 30, October, 2012. Recently, even banks had suggested that RBI should cut policy rates to induce growth in the economy.
CII issued a statement regarding this which said, "RBI should bring down repo rate by 50 basis points immediately and another 50 bps subsequently during the course of the financial year." It also suggested that RBI should slash cash reserve ratio (CRR) by 0.75 percent and bring it down from its existing level of 4.5 percent.
Talking on the matter, the Director General of CII Mr. Chandrajit Banerjee said, "This would not only help revive business sentiment and enable companies to raise capital at affordable cost but would also ensure that liquidity in the economy remains adequate." CRR refers to that portion of deposits which banks are required to park with the central bank.