Finance Minister of India

               Governor, RBI was in Delhi yesterday. He called on the Prime Minister last evening. I was present at the meeting.

2.             Prime Minister reviewed the financial situation, with particular reference to the liquidity position. The developments in, and measures taken by, other countries were also reviewed.

3.             We took into account:

• that the call rate was between 9.0 and 9.1 per cent yesterday;
• that banks accessed approximately Rs.62,500 crore through LAF-I and LAF-II yesterday;
• that the banks were able to access only Rs.3,500 crore from the special window of Rs.20,000 crore opened by RBI for providing liquidity to mutual funds;
• that inter-bank lending still remains constrained and it is necessary to overcome these constraints;
• that it is important to ensure that credit flows to borrowers within the sanctioned limits of term loans and of working capital; and that it is also important to enhance the credit limits where borrowers require more credit;

4.             Government and RBI are agreed on the measures that have to be taken immediately.

5.             Governor, RBI is on his way to Mumbai and will work out the details of the measures agreed upon. I expect to be able to make a statement later in the afternoon.