The Federation of Indian Export Organisations (FIEO) is of the view that though the rise in Cash Reserve Ratio (CRR) by Reserve Bank of India (RBI) was imminent, it has been higher than expected and may affect interest rates, president A Sakthivel said here.

‘The question that may arise in Q2/Q3 would be whether there is sufficient liquidity in the system after withdrawal of Rs 36,000 crore,’ Mr Sakthivel said, adding that that it is anticipated that in Q2/Q3 borrowings by the corporate may increase.

Further, capital inflows may continue and the RBI may need to sterilise through Market Stabilisation Scheme (MSS) as in the past which may require additional liquidity.

Possibilities of significant Government borrowings would also be on the cards around that time, he said in a statement.

FIEO Chief hoped that in such circumstances, the RBI in its wisdom would ensure that sufficient liquidity is available to the MSME sector to contain any increase in interest rates.

Further, interest subvention as available at present would be extended to all sectors at least till December 31, 2010.

UNI