Govt will respond swiftly to global financial crisis: FM

New Delhi, Oct 10 (PTI) Government and Reserve Bank of India will respond swiftly to the unfolding global financial crisis, Finance Minister P. Chidambaram said Friday.

The Finance Minister's statement was read out by Finance
Secretary Arun Ramanathan here. Following is the text of
Chidambaram's statement.

"On Wednesday, the Cabinet reviewed the financial
situation in India and authorised me to issue a statement on
behalf of the Cabinet/Government. We have identified that the
main problem is liquidity, and we have assured the people that
we will respond swiftly and take steps to infuse more
liquidity according to the needs of the situation. Reserve
Bank of India was advised to take appropriate steps in this
behalf.

Following the cut in the C.R.R. by 50 basis points
announced on Monday, October 6, 2008, the R.B.I. has, this
morning, announced a further reduction in the C.R.R. by 100
basis points, thus making a total reduction of 150 basis
points. I welcome the decision of the R.B.I. The Governor,
R.B.I. has also assured the Government that the R.B.I. is
keeping a close and continuous watch on the situation and will
take appropriate steps according to the evolving situation.

Meanwhile, I have received a number of representations
from banks, other financial entities/intermediaries,
corporates and small businesses that the issue of liquidity
must be addressed in a comprehensive manner. They have
impressed upon me that intermediation of credit must take
place smoothly and efficiently.

I have, therefore, decided to constitute a group to make a
quick assessment of the requirements of liquidity and advise
the Government. The group will be headed by Shri Arun
Ramanathan, Finance Secretary and Secretary (Financial
Services). It will consist of:

(i) Representative of R.B.I.

(ii) Shri T.S. Narayanaswamy, Chairman, I.B.A. & C.M.D.,
Bank of India

(iii) Shri U.K. Sinha, C.M.D., U.T.I.

(iv) Shri Y. M. Deosthalee, C.F.O., L&T & Director
in-charge, L&T Finance Limited

(v) Shri R.M. Malla, C.M.D., S.I.D.B.I.
The group has been authorised to co-opt any more members, if
necessary.

I have requested the group to begin work immediately,
also visit Mumbai, and submit an interim report within a week.

I wish to draw attention to the statement made by Mr.
Robert Zoellick, President, World Bank that "India is in a
position to weather the global financial turmoil". I also wish
to draw attention to the statement of Mr H. Kuroda, President,
A.D.B. that "the impact on the financial sector in Asia is
limited this time".

Credit is the lifeline of trade, commerce and business
and, hence, it is important that credit continues to flow to
all sectors of the economy. In consultation with R.B.I. and
other regulatory authorities, Government will address the
liquidity and other concerns about the economy.

It is also important to maintain our confidence in the
Indian economy. As the Cabinet noted on Wednesday, the
fundamentals of our economy are strong and there are many
indicators which affirm the sound fundamentals." PTI RK