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L IQUIDITY C RUNCH BY: Ashish Gosain Sreya Sarkar
OBJECTIVES To understand what is Liquidity crunch To understand the mechanism of Liquidity Crunch To study the reasons for Liquidity Crunch in Domestic Market To suggest Feasible Solutions for it
BANK BUSINESSMAN ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Story Of A Bank And A Man
Arrival Of Liquidity Crunch Inflow of Dollars Forex Kitty Increased Hurting  Importers RS Excess money In the market RBI  intervened CRR MSS Depreciation  Of  Rupee By 20% Hurting  Exporters RBI Offloading Forex  Kitty Shortage  Of  Money  supply $316M Global Meltdown
Reasons FIIs Outflow RBI Stabilizing Rupee Money  Tightening Lack of Gov’t Spending Flights Of FDI Global Meltdown Increased Commodity Price Decreased Interest Rate
FEASIBLE SOLUTIONS Cutting Down CRR to 3 % Cutting Down SLR to 20% Decreasing the Repo Rate Lowering the interest rate Safeguard against Terrorism Attractive Foreign Investment Increased Gov’t spending Improved Technology
CONCLUSION Liquidity Crunch is a short term Phenomena In India, But its arrival after sub-prime crisis makes it a tsunami Because shortage of money supply will further hamper the production process which is vital to run the engines Of the development process. Lack of confidence in the international market worsen this crisis Cause inflows of FDIs and FIIs will be less. But as India will be growing at more than 5% It still remains a hot venue for investment
T HANK   Y OU

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Presentation for Finance Seminar

  • 1. L IQUIDITY C RUNCH BY: Ashish Gosain Sreya Sarkar
  • 2. OBJECTIVES To understand what is Liquidity crunch To understand the mechanism of Liquidity Crunch To study the reasons for Liquidity Crunch in Domestic Market To suggest Feasible Solutions for it
  • 3.
  • 4. Arrival Of Liquidity Crunch Inflow of Dollars Forex Kitty Increased Hurting Importers RS Excess money In the market RBI intervened CRR MSS Depreciation Of Rupee By 20% Hurting Exporters RBI Offloading Forex Kitty Shortage Of Money supply $316M Global Meltdown
  • 5. Reasons FIIs Outflow RBI Stabilizing Rupee Money Tightening Lack of Gov’t Spending Flights Of FDI Global Meltdown Increased Commodity Price Decreased Interest Rate
  • 6. FEASIBLE SOLUTIONS Cutting Down CRR to 3 % Cutting Down SLR to 20% Decreasing the Repo Rate Lowering the interest rate Safeguard against Terrorism Attractive Foreign Investment Increased Gov’t spending Improved Technology
  • 7. CONCLUSION Liquidity Crunch is a short term Phenomena In India, But its arrival after sub-prime crisis makes it a tsunami Because shortage of money supply will further hamper the production process which is vital to run the engines Of the development process. Lack of confidence in the international market worsen this crisis Cause inflows of FDIs and FIIs will be less. But as India will be growing at more than 5% It still remains a hot venue for investment
  • 8. T HANK Y OU