Agencies
New Delhi, Oct 15:
Finance minister P Chidambaram has announced more measures to enhance liquidity in the system by allowing corporates to bring more money from foreign investors, releasing more cash for banks and taking steps to further strengthen banking system.
Chidambaram has announced that the Reserve Bank of India will immediately release Rs 25,000 crore to commercial banks, cooperative banks and RRBs under the farm loan waiver scheme.
He also announced doubling of the investment limit to six billion dollars for foreign institutional investors in corporate bonds.
The series of announcements came on a day when stock markets tanked, with the benchmark Sensex losing 674 points, reversing the two-day winning streak.
Chidambaram, who along with the RBI governor had briefed the Prime Minister last night on the measures taken so far while exploring the other options, said the measures so far have helped improve liquidity and it has been felt that more steps are needed.
"The government also decided to provide banks access to finance for raising their capital adequacy ratio to 12 per cent by a suitable date in the future from the current level of 10-12 per cent," Chidambaram told reporters here.
Identifying liquidity as the main problem which has constrained the financial system, the government also decided that RBI would immediately release to lending institutions the first instalment against their outgo on farm debt waiver scheme.
RBI will provide Rs 7,500 crore to commercial banks and Rs 17,500 crore to NABARD as the first instalment against the payment towards debt relief scheme.
The government is also issuing advisory to PSU banks to ensure easy draw-down against sanctioned limit so that banks can actively participate in inter-bank call money market, he said.
The minister said that SEBI has informed him that a hike in FII limit from three billion dollars to six billion dollars for corporate bonds would address any request for relaxation in the proportion of investment in equity and debt required to be maintained by an FII under current regulation.
There will be no requirement of providing collateral by financial institutions under farm debt waiver scheme, he said.
As such, Rs 25,000 crore will be given to commercial banks, RRBs and cooperative credit institutions, he said.
Markets in red again, Sensex below 11,000 level
Mumbai, Oct 15 (Agencies):
Stock markets today slipped into the negative territory again after two days of gaining, with the benchmark Sensex nosediving over 670 points to close below 11,000 level on across-the-board selling by funds and general investors.
After notching up more than 950 points in the past two days, the BSE barometer today plunged to 10,809.12 points, a steep fall of 674.28 points.
The markets opened on particularly weak note and the key index never recovered from its loss of 250 points at the outset.
National Stock Exchange index Nifty also tumbled by 180.25 points at 3,338.40.
Marketmen said buying of the past two day could not be sustained today as sentiment was weak on concerns that deepening financial crisis could lead to a global recession. The fears were were mirrored in other Asian bourses as well, they noted.
Major indices like Hang Seng Index and Singapore Strait Times Index closed lower in the range of 3-5 per cent taking cues from marginal in US overnight.
On BSE selling pressure was felt across the board and there on Sensex scrip could post any gain while all sectoral indices closed in the red. Capital goods, consumer durables and metal segment recorded hefty losses and topped the list of big sectoral losers.
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