Click to play videoNew Delhi: The Reserve Bank and government on Wednesday agreed to take fresh measures immediately to infuse liquidity into the financial system.
"Government and RBI are agreed on the measures that have to be taken immediately," Chidambaram said in New Delhi.
The liquidity panel, an experts group led by Finance Secretary Arun Ramanathan, will be meeting in Mumbai later on Wednesday to decide on pumping more liquidity into the system.
The Finance Minster also said that it was important that adequate cash should be made available to end users and the banking system but within the existing framework.
"Inter bank lending still remains constrained and it necessary to overcome these constraints. It is important to ensure that credit flows to borrowers within the sanctioned limits of term loans and working capital. It is also important to enhance the credit limits where borrowers require more credit," the Finance Minister added.
Reserve Bank of India (RBI) Governor Duvvuri Subbarao will work out the details of the measures agreed at the meeting with Prime Minister Manmohan Singh on Tuesday evening.
"I expect to be able to make a statement later in the afternoon," Chidambaram said.
Manmohan was briefed on the steps taken so far to improve liquidity. Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and top officials from the Finance Ministry were also present at the meeting.
The RBI had announced a special 14-day repo to enable banks to meet liquidity needs of mutual funds.
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