Regulators assess impact of global financial turmoil; industry feels the squeeze

D Subbarao, governor, RBIMumbai: Financial market regulators have held a meeting to review the country's preparedness to deal with challenges arising from the global financial turmoil, which has already taken a toll on several American and European banks and pulled down the stock markets the world over.

The meeting comes in the wake of recent remarks by prime minister Manmohan Singh that India is not immune to what happens around the world.

The review also comes amidst increasing demands by industry associations that the Reserve Bank cut its short-term lending rate (repo rate) and the ratio of deposits that banks have to keep with the central bank (CRR) by one per cent to ease liquidity.

A meeting of the High-Level Coordination Committee on Financial Markets, chaired by RBI governor D Subbarao on Wednesday ''reviewed the preparedness of all regulators to act in a coordinated and timely manner to deal with the emerging market situation in order to ensure continued smooth functioning of the markets," an RBI release said.

The meeting was attended by finance secretary Arun Ramanathan, economic affairs secretary Ashok Chawala, SEBI chairman C B Bhave, Provident Pension Fund Regulatory and Development Authority's (PFRDA) chairman D Swarup and Insurance Regulatory and Development Authority (IRDA) member C R Muralidharan.

Even as the high-level committee discussed the recent developments in the domestic financial markets in the wake of the global financial market crisis, industry chambers have made a representation to the RBI governor asking it to curtail CRR and repo rate by one per cent in order to facilitate borrowing by the corporate sector to fund expansion plans.