Date:21/06/2005 URL: http://www.thehindubusinessline.com/2005/06/21/stories/2005062101340600.htm

Back `Allow cos to retire high cost debts'

Our Bureau

New Delhi , June 20

THE Reserve Bank of India should issue instructions to banks and financial institutions (FIs) to allow corporates to retire their high cost borrowings with minimal charges. This process will not only reduce interest burden on the industry but also increase the liquidity of banks and FIs which in turn shall enable the banks to reduce their non-performing assets (NPAs), feels PHD Chamber of Commerce and Industry (PHDCCI).

PHDCCI has also suggested that no premium be demanded from the borrower so that competitiveness of industry is not adversely affected in the global context.

In the last five years many corporates have raised high cost term loans from banks/FIs and since interest rates have softened, corporates are keen to prepay such costly loans, but are faced with a problem of banks/FIs charging them high prepayment charges.