More measures to infuse liquidity on anvil, says FM

New Delhi, Oct 15 (PTI) The Reserve Bank of India (R.B.I.) and government Wednesday agreed to take fresh measures immediately to infuse liquidity into the system, says Finance Minister P. Chidambaram.

"Government and R.B.I. are agreed on the measures that have to be taken immediately," he told reporters here.

R.B.I. Governor D. Subbarao, the minister said, will work out the details of the measures agreed upon between the government and the central bank.

"I expect to be able to make a statement later in the
afternoon," Chidambaram said.

He said Prime Minister Manmohan Singh Tuesday reviewed
the financial situation with particular reference to the
liquidity position at a meeting with the R.B.I. Governor,
Deputy Chairman of the Planning Commission Montek Singh
Ahluwalia and senior officials of the ministry.

The developments and measures taken by other countries
were also reviewed, the Finance Minister said.

Meanwhile, the Bombay Stock Exchange (B.S.E.) benchmark
index Sensex was down by 345 points or three percent in early
trade.

Chidambaram said during the meeting with the Prime
Minister it was felt, "that inter-bank lending still remains
constrained and it is necessary to overcome these
constraints".

The meeting noted that it is important to ensure that
credit flows to borrowers within the sanctioned limits of
loans and working capital, he said.

"We took into account that it is also important to
enhance the credit limits where borrowers require more
credit," he said.

The meeting, he said, also took note of the fact that the
banks were able to access only Rs 3,500 crore from special
window of Rs 20,000 crore opened by R.B.I. for providing
liquidity to mutual funds," he said.

The meeting also observed that the inter-bank call rates
was between 9 and 9.1 percent Tuesday and the bank accessed
approximately Rs 62,500 crore through liquidity Adjustment
Facility-I and II Tuesday.