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Topic : Liquidity Risk
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Equity Investments: Hot Stocks

 
Started by : Deepak Tripathi, Portfolio Manager, Sun Group   11 05 2008 14:05:46 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : Productivity & Performance(Strategy & Execution)
Activity:  28 views;  last activity : 07 06 2010 20:18:09 +0000

The freeze on liquidity in the local market and the severe downturn in the stock market have hit Indian fund houses which are now seeing a drop in assets under management. It’s been a difficult few weeks for the mutual fund (MF) industry, given the pressure on redemptions in some of the fixed-maturity plans (FMPs) by large corporate investors. What more should RBI and the government do besides the recent steps taken to ease liquidity?

 
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1 people should start spending
2 Reducing Interest Rates
3 Reduction in CRR and SLR

people should start spending

idea posted by sandesh saboo Research Associate/Analyst, saboo associates

more then the rbi if the general public understands that we are growing at a healthy rate and the business confidence is back and satrt spending as they would regularly do thing would come back and there would be no recession .

those who have fund and owe to people return the funds and this would create the cycle and change so many things.

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Reducing Interest Rates

idea posted by Vikrant Panwar Portfolio Manager, IL&FS Venture Corporation
Banks may cut their deposit rate first, and once the cost of funds comes down, then cut the rate on advances also. Inflation is certainly cooling. By reducing interest rates, it will be ensured investment will increase thus boosting the economy.
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by Veena Gupta, Analyst, Blackstone Group  | 11 05 2008 14:20:57 +0000

The repo rate cut is a welcome move by RBI and signals its focus on ensuring sufficient liquidity and smooth functioning of financial markets to support growth… but the impact on lending and deposit rates will have to be seen over time

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Reduction in CRR and SLR

idea posted by Deepak Tripathi Portfolio Manager, Sun Group
I would say that RBI and government can provide credit to the non-banking industry as well. RBI could think of further reduction in Cash Reserve Ratio(CRR) and Statutory Liquidity Ratio (SLR). At the moment, oil and fertilizer bonds do not qualify as securities for meeting SLR requirements. This norm could be changed. Coming back to mutual funds, at least 90% of the assets in debt schemes are in highest-rated paper. RBI should ensure that these papers remain liquid, by offering credit against them.
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