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| US meltdown reaches Jammu | | | | Jammu is reported to have lost Rs 25 Crores in a matter of just few days as the repercussions of drastic down fall in international share market had a side effect in the Indian share market too. The Sensex on Monday dipped 724 points and slipped to 12000 mark. NIFTY too receded to 215 points. One of the main factor for sharp decline is because of sub prime crisis (SPC) in America, where the investors are in search of secure investment alternatives who pulled out their money from the market in huge quantity. The sudden withdrawl forced the Sensex to record a minimum low in the last two years. To avoid such a situation and to tackle such a crisis, Reserve Bank of India must increase liquidity in banking system axed at 0.50 in CRR (Cash Reserve Ratio). With this initiative of the government the banks could be agreed to lessen business loan rate of interest. According to Reserve Bank of India, new CRR of 8.5 per cent would be effective from October 11,2008. It is sure that with this initiative of the RBI, market will witness a little relief. With a decrease in CRR, around 20 thousand crore rupees would be pumped into the banking system, but the sum is not sufficient to overcome such a crisis. The Reserve bank had adopted tough currency policy to control inflation. This is for the first time in last three years when flexibility is being adopted in currency policy. Seeing the adverse condition of share market the regulatory institution of share market, Securities and Exchange Board of India (SEBI) has lifted ban from investment through P notes (Participatory Notes). It is noticeable that SEBI had restricted the investment at 40 per cent last year in October after market witnessed a shot up. Foreign investors invest money in Indian market through P notes. The investors invest money with SEBI through FII. It is believed that market would again flourish due to the steps taken by SEBI, but the market experts believe that such a step is not going to make a big difference. As, due to the slow down in global market the possibility of foreign investment is very less. The foreign investors might not take risk to invest their money in during the slow down period. The government would have to take solid steps to make the investment situation better. Government is having resources so paying attention on landing rate is only required. Risk management of public sector banks is strong and they have capacity to face such a slow down. Immediate and farsighted steps are required to recover from this situation. |
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