No liquidity crisis in banking: Chidambaram

Published on Mar 24, 2006 03:42 PM IST

Liquidity has to be maintained so that interest rates remain attractive to investors. The call money rates have not increased.

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None | ByIndo-Asian News Service, Bangalore

Finance Minister P Chidambaram on Friday said that there was no liquidity crisis in the banking industry and that the call money rates had not gone up.

"Liquidity is not a concern. Liquidity has to be maintained so that interest rates remain attractive to investors. The call money rates have not increased," Chidambaram told reporters on the sidelines of a function.

Referring to the suggestions made by chief executives of the public sector banks at a meeting with him in New Delhi on Thursday, Chidamabaram said it was up to the Reserve Bank of India (RBI) to decide whether or not to reduce cash reserve ratio (CRR) to increase liquidity.

"It is for the central bank (RBI) to decide on what should be the CRR. I cannot decide what the RBI should do. Since my meeting with the heads of public sector banks, there has been no change in the situation. A few suggestions have come. We are looking into them," he said.

Asked whether LPG prices would go up, Chidambaram said it was up to the ministry of petroleum and natural gas to decide on the issue as it was governed by administrative price mechanism.

"The prices of petroleum products are decided by the ministry concerned. As far as the finance ministry is concerned, there is no impact of central sales tax (CST) on the administrative price of LPG," he said.

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