Crisil sees RBI's liquidity measures hitting car, home, cement sales

Crisil sees RBI's liquidity measures hitting car, home sales
The rating agency Crisil has cautioned that Reserve Bank of India's (RBI) move to tighten the liquidity and raise the short-term interest rates may impact companies in sectors like automobile, realty, cement and steel.

RBI, in the last two weeks, has raised the short-term interest rates, restricted the funds that banks can borrow from central bank's LAF window and also increased the daily CRR requirements, thus leaving them with limited funds with an aim to curb speculative trading in currency contracts.

Though the moves of central bank, aimed at curbing volatility in exchange rates, are meant to be rolled back with the return of stability, experts have believed that further tightening could dent the growth seriously, leading to risk of credit rating downgrades.

A report from Reuters cited Crisil as saying "It expects credit quality pressures on corporates to continue, given the difficult environment. The pressure will be greater on firms with higher leverage and longer working capital cycles."

Read more about: crisil, rbi, interest rates
Story first published: Friday, July 26, 2013, 9:20 [IST]
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