Mumbai: Concerned over the persistent downtrend in equity
values and the sharp overall decline on stock markets, the
Confederation of Indian Industry (CII) has made the following
suggestions to engineer a revival over the period of next three
months. It has suggested:
- Reducing general interest rates by 1 to 1.5 per cent.
- Introduction of margin-trading.
- Margin requirement be removed for both FIs and FIIs.
- Raising annual limit on creeping acquisitions to 15 per cent
from the current 10 per cent
- Fix lending of margin money to market intermediaries at 25 per
In a communiqu, it has said: In the background of the
Federal Reserve and ECB cuts, the RBI should reduce interest rates
by 1 per cent to 1.5 per cent. Though this may not spur
investments in the real estate, it would give positive signals to
equity markets and the industry, which have been expecting a rate
cut for some time now.
Though the RBI had announced introduction of margin-trading, it
is yet to take off. Margin requirements had been fixed at 40 per
cent, which CII feels should be brought down to 25 per cent.
CII feels the ban on badla has been one of the main
reasons for drop in volumes and liquidity. It is imperative to
reintroduce systems of margin-trading without the negative
attributes of the earlier ones.
CIIs other suggestions include reduction in
dematerialisation time, introducing electronic fund transfer,
demutualising stock exchanges and reducing the number of stock
exchanges in the country.