Days after RBI tightened liquidity to check rupee fall, HSBC country head and FICCI president, Naina Lal Kidwai today said the move was bad for industry as it would eventually lead to hike in interest rate.
Kidwai hoped that these measures will soon be eased as they have been effective in checking free fall of the rupee.
“Economy is in the problem. The reason it came (RBI actions) was to help the economy in that the rupee fall was sought to be corrected and it did. It corrected the rupee,” she said in an interview.
If rupee shows normalcy, she said, the measures announced to check rupee fall should be eased.
“The other side of it is that it makes liquidity tight which means access to funds becomes harder which is RBI’s intention. Hence, it is defacto interest rate rise without being an interest rate rise,” she said.
“So, to that extent it’s not good for the industry. So, I hope it does not stay forever,” she said, adding, the steps are temporary in nature.
Kidwai said she hopes that the steps could be eased in a month or a two.
In a move to stem the continuing fall of rupee, the RBI earlier this week came out with a slew of measures including hiking the lending rates for banks, limiting the borrowing of the system at Rs 75,000 crore and sucking up of Rs 12,000 crore, to make the currency dearer.
The measures came after high level meetings between the Prime Minister and the Finance Minister followed by discussions with RBI Governor D Subbarao who was called as the rupee lost 33 paise to reach 59.89 after touching over 61-levels last week.
Under the measures announced, the RBI raised lending rates to commercial banks 2 per cent to 10.25 per cent making the loans costlier.