ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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End of Credit Authorisation Scheme-Requiem for Credit Control

Requiem for Credit Control? S R Krishna Iyer THERE is jubilation all round that the Credit Authorisation Scheme (CAS) introduced in 1965 has now been virtually withdrawn. Although the Reserve Bank has said that it will undertake post- sanction scrutiny of cases having credit limits of over Rs 5 crore, those concerned know that this does not mean much and is only put there to stress that the RBI is still retaining some control to see that credit is deployed on the right lines. Business and industry are agitating for discontinuation of even this post-sanction scrutiny and it will not be long before this is also agreed to. The clout of business and industry is quite strong now and with elections not being far off their bargaining power has also increased. The government has been very liberal in loosening control and in giving manifold concessions to business and industry in the past few years. Some quarters have expressed doubts that industry has not responded adequately to the concessions by increasing output, improving efficiency and reducing costs. Business and industry have long been arguing that finance is extremely costly and because of CAS adequate and timely credit was not available. Government seems to be in agreement with these arguments and there were unconfirmed reports that the government was pressurising the Reserve Bank to soften on both the fronts.

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