The Reserve Bank and government on Wednesday agreed to take fresh measures immediately to infuse liquidity into the system, says Finance Minister P Chidambaram.
"Government and RBI are agreed on the measures that have to be taken immediately," he told reporters here.
RBI Governor D Subbarao, the minister said, will work out the details of the measures agreed upon between the government and the central bank.
"I expect to be able to make a statement later in the afternoon," Chidambaram said.
He said Prime Minister Manmohan Singh on Tuesday reviewed the financial situation with particular reference to the liquidity position at a meeting with the RBI Governor, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and senior officials of the ministry.
The developments and measures taken by other countries were also reviewed, the finance minister said.
Chidambaram said during the meeting with the prime minister it was felt, 'that inter-bank lending still remains constrained and it is necessary to overcome these constraints'.
The meeting noted that it is important to ensure that credit flows to borrowers within the sanctioned limits of loans and working capital, he said.
"We took into account that it is also important to enhance the credit limits where borrowers require more credit," he said.
The meeting, he said, also took note of the fact that the banks were able to access only Rs 3,500 crore (Rs 35 billion) from special window of Rs 20,000 crore (Rs 200 billion) opened by RBI for providing liquidity to mutual funds," he said.
The meeting also observed that the inter-bank call rates was between 9 and 9.1 per cent on Monday and the bank accessed approximately Rs 62,500 crore (Rs 625 billion) through liquidity Adjustment Facility-I and II on Tuesday.
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