New Delhi, March 23: The Reserve Bank of India will issue a detailed statement by March 31 to help banks tide over the liquidity crunch due to high credit offtake and inadequate resource mobilisation.

“The Reserve Bank will come out with an action plan on liquidity and interest rates by March 31. A five-member committee of the chairmen of public sector banks will hold discussion with the RBI governor early next week,” finance minister P. Chidambaram said after a meeting with the chiefs of public sector banks here today.

He said banks had put forward various suggestions to increase the liquidity and maintain soft interest rates. “All suggestions have been taken on board.”

The proposals include a cut in the cash reserve ratio from the existing five per cent. “A one percentage point cut in the CRR would infuse liquidity to the extent of Rs 20,000 crore,” said H.N. Sinor, chief executive of the Indian Banks’ Association.

Banks have also suggested releasing excess funds maintained under the statutory liquidity ratio (SLR) over and above the mandatory 25 per cent. Currently, at an aggregate level, banks are maintaining an SLR level of 31 per cent.

“The extra 6 per cent would release funds to the tune of Rs 60,000 crore,” Sinor said.

SLR is a certain proportion of liabilities that each bank has to keep in the form of cash, gold or unencumbered approved securities.

Besides, the option of releasing funds from the market stabilisation scheme (MSS) of the RBI was also considered as a possible measure to inject additional liquidity. The MSS has a corpus of Rs 30,000 crore.

Banks also suggested making NRI deposits more attractive as a measure to enhance liquidity.

The meeting also discussed ways and means to enable banks to provide short-term credits to farmers at concessional rates for the coming kharif season.

The government has decided to provide short-term credit to farmers at 7 per cent, with an upper limit of Rs 3,00,000, on the principal amount.

To enable banks give crop credit at 7 per cent, bankers have suggested options like giving subsidies to banks, asking Nabard to refinance at concessional rates and reducing credit risk weightage for agriculture loans.

“We have suggested tax breaks to banks for this particular loan portfolio or reduce the risk weightage of the loan from 100 per cent to about 50 per cent,” Sinor said.