FM hopes banks would resume brisk lending; counsels investors

New Delhi, Oct 23 (PTI) Asserting that there is adequate
liquidity in the system now, Finance Minister P. Chidambaram
expressed hopes that banks will resume brisk lending and
advised stock market investors not to resort to panic sales.

Chidambaram also said inflation which dropped to 11.07
percent, a fall for the fourth straight week, is still high
but added that the rate of price rise will moderate further as
global commodities and fuel prices continue to soften.

Stock markets it seemed took cues from his remarks as
the benchmark Sensex which was down by nearly 500 points in
morning recovered 579 points by mid-session after his chat
with reporters. However, the markets later closed in the red.

"If you go by the reverse repo, I think there is
adequate liquidity. The point now is banks should not park
excess funds with reserve bank. They have been advised to
lend," Chidambaram said.

To a question that ICICI Bank has increased home loan
rates, he said," I am told that this information is not
correct."

Advising stock market investors, Chidambaram said they
should take informed decision and not sell in panic.

"For every seller, there is a buyer. Before anyone sells,
he must ask himself one question-- if I am selling at this
price, why is other party buying at this price. So, obviously
other finds it attractive to buy, so nobody should sell in
panic, that is the advice I have been giving and I have
nothing more to say," he said.

He said stock lending to overseas entities is likely to
reverse soon as regulator S.E.B.I. is watching this activity.

Commenting on R.B.I. relaxing E.C.B. norms Wednesday, he
said idea (easing of E.C.B. norms) is that those who have
raised money in the past in rather restrictive regime and
those who will raise money today onwards under the liberalised
regime should bring back money into India as early as
possible.