New Delhi (PTI): Industry body CII has asked the government to allow oil marketing companies to get dollars directly from the Reserve Bank of India against oil bonds that would be issued to them.

"This amounts to monetising the oil bonds. This would ensure that the forex reserves held by the RBI are put to good use even while the rupee is protected from coming under pressure owing to the need for dollars," the chamber said.

RBI has taken this step earlier and in the present situation it makes sense as oil companies are finding it difficult to source dollars from the market, it said.

To strengthen the vulnerable small and medium enterprises (SMEs), a corpus should be set up to lend SMEs, as they would be disproportionately hurt by the non-availability of credit, it added.

RBI and the Ministry of Finance may set up a SPV also contributed by the banks to ensure that SMEs are allowed credit close to prime lending rates on the credit worthiness of the unit and the project.

Besides, the chamber has suggested various measures including repo rate cut, easing foreign direct investment norms to improve the liquidity in the market and bailout Indian Inc from the ongoing credit crunch.