Timeline on steps taken to bring liquidity to Indian financial system
Following are some of the measures taken since Sep 16 to calm nervous Indian markets amid growing global turmoil and improve domestic liquidity conditions:business Updated: Oct 15, 2008 20:30 IST
* Sep 16: Reserve Bank of India (RBI) raises interest rate ceilings on NRI deposits and provides additional liquidity by (a) permitting banks to avail additional liquidity support under the Liquidity Adjustment Facility (LAF) up to 1 percent of their net demand and time liabilities, and, (b) extending the secondary LAF to a daily basis.
* Sep 22: Finance ministry raises overseas borrowing caps for infrastructure companies for rupee expenditure from $100 million to $500 million. Also raises all-in-cost ceiling from Libor +350 to Libor +450 basis points (bps).
* Oct 6: Markets regulator Securities and Exchange Board of India (SEBI) lifts the curbs on P-Notes. This implies that: (a) Cap on issuance of P-notes in the cash segment removed, allowing unregistered foreign funds to invest in Indian securities and infuse much-needed liquidity.
* Oct 6: RBI reduces the cash reserve ratio (CRR) by 50 bps to 8.5 percent - first cut since June 2003. Move expected to infuse Rs.200 billion into the system.
* Oct 7: Finance ministry expands definition of infrastructure companies to include mining, exploration and refining companies for ECB purposes.
* Oct 10: RBI once again reduces CRR by 100 bps to 7.5 percent to release Rs.600 billion for credit.
* Oct 15: Rs.25,000 crore (Rs.250 billion or $5.5 billion) released for lending institutions for credit to funds-starved industry.
* Oct 15: CRR further cut by 100 bps to 6.5 percent, Rs.400 billion infused into system.