Union Finance Minister Pranab Mukherjee, on Wednesday, 10 June 2009, told the public sector banks (PSBs) to pare their lending rates further and provide cheaper credit to industry and consumers to spur economic growth. At his first meeting with chief executives of the PSBs after assuming office, Mr Mukherjee voiced serious concern over non-availability of bank credit at affordable rates, especially as they were not in sync with the signals emanating from the Reserve Bank of India (RBI).
Between September 2008 and April 2009, the RBI has cut key policy rates over 400 basis points. However, industry and the government have constantly complained that these rate cuts have not led to a equal decrease in lending rates by banks.
While stressing PSBs to prune prime lending rates, Mr Mukherjee said affordable credit was necessary in the interest of overall development of the country and to ensure that the growth process benefits all people.
He further argued that the financial position of commercial banks, especially those owned by the government, remained robust with a 26% growth in their overall business and 27% jump in profits.
The finance minister also assured state-run commercial banks that the government would infuse more funds to ensure their capital base remained strong and credit flow did not suffer in this regard.
He also made a pitch for consolidation among commercial banks to improve their competitiveness globally and reduce the risk of financial stability, but said such proposals had to come from bank managements themselves.
Between September 2008 and April 2009, the RBI has cut key policy rates over 400 basis points. However, industry and the government have constantly complained that these rate cuts have not led to a equal decrease in lending rates by banks.
While stressing PSBs to prune prime lending rates, Mr Mukherjee said affordable credit was necessary in the interest of overall development of the country and to ensure that the growth process benefits all people.
He further argued that the financial position of commercial banks, especially those owned by the government, remained robust with a 26% growth in their overall business and 27% jump in profits.
The finance minister also assured state-run commercial banks that the government would infuse more funds to ensure their capital base remained strong and credit flow did not suffer in this regard.
He also made a pitch for consolidation among commercial banks to improve their competitiveness globally and reduce the risk of financial stability, but said such proposals had to come from bank managements themselves.
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