Mumbai: Financial market regulators have held a meeting to review the country's preparedness to deal with challenges arising from the global financial turmoil, which has already taken a toll on several American and European banks and pulled down the stock markets the world over.

The meeting comes in the wake of recent remarks by prime minister Manmohan Singh that India is not immune to what happens around the world.

The review also comes amidst increasing demands by industry associations that the Reserve Bank cut its short-term lending rate (repo rate) and the ratio of deposits that banks have to keep with the central bank (CRR) by one per cent to ease liquidity.

A meeting of the High-Level Coordination Committee on Financial Markets, chaired by RBI governor D Subbarao on Wednesday ''reviewed the preparedness of all regulators to act in a coordinated and timely manner to deal with the emerging market situation in order to ensure continued smooth functioning of the markets," an RBI release said.

The meeting was attended by finance secretary Arun Ramanathan, economic affairs secretary Ashok Chawala, SEBI chairman C B Bhave, Provident Pension Fund Regulatory and Development Authority's (PFRDA) chairman D Swarup and Insurance Regulatory and Development Authority (IRDA) member C R Muralidharan.

Even as the high-level committee discussed the recent developments in the domestic financial markets in the wake of the global financial market crisis, industry chambers have made a representation to the RBI governor asking it to curtail CRR and repo rate by one per cent in order to facilitate borrowing by the corporate sector to fund expansion plans.

They fear that the money market may tighten further if the RBI decides to raise the bank rate and the CRR further. Repo rate and cash reserve ratio currently stands at nine per cent each.

The hike in interest rate would in turn add to the inflationary spiral rather than curb it. This would hurt both the consumer and the industry, they pointed out.

Indian corporates are now increasingly going for rupee funding as dollar financing has become uncertain and rather impossible within the RBI approved spreads, they point out.

''Squeezing credit would have serious impact on the survival and sustenance of the industry,'' said Assocham president Sajjan Jindal.