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Banks urged to cut lending rates! |
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In one of the strongest messages yet to banks to cut interest rates, Union finance minister Pranab Mukherjee has told the heads of public sector banks that they have not cut their lending rates adequately to reflect the reduction in key policy rates by the RBI.
Steps taken by RBI did not result in commensurate reduction in lending rates by banks, he regretted. "I would urge the banks to address these concerns (cost and availability of credit) expeditiously and in adequate measure," he said.
Further cut interest rates were desirable to provide cheap credit to industry in order to spur economic activity. The concern within the government is that the rapid expansion of credit is required so that the economy remains buoyant.
The FM said: “Expansion of credit at a lower interest rate will help restore the environment for rapid growth. The government will ensure that credit growth of the public sector banks will not suffer for want of capital”. He said India faced many challenges on the economic front, but stimulus measures taken by the government and central bank would help push growth.
“The government is also looking at strengthening the banks in light of what has happened in the West. The process of consolidation of banks may be necessary to improve the state of competitiveness of Indian banks globally,” he stated.
These initiatives, the Minister hoped, "will help restore the environment for rapid growth and ensure that the growth process benefits our people."
To make the growth more inclusive, the Minister asked the banks to increase the reach of banking by vigorously pursuing branchless banking initiatives.
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