FM to meet bankers today, review rate cut

FM to meet bankers today, review rate cut
The Financial Express, June 10, 2009, Page 2

Press Trust of India, New Delhi

Finance minister Pranab Mukherjee will meet heads of public sector banks on Wednesday and is expected to impress upon them the need to further moderate interest rates and increase credit flow to industry.

The broad agenda of the meeting include review of interest rates, credit growth and agriculture loans, official sources said.

Mukherjee had said last month after assuming charge that meeting bankers would be one of his first steps and would ask banks for a “benign plan of action.” “Industry and business have been hurt by the cost of finance... the cost and the speed with which finance can be accessed remains a matter of concern,” Mukherjee had said.

The high profile meet will also dwell upon infrastructure lending, capital adequacy over medium term and housing and education loans, sources added. The meeting would also assess the impact of the three stimulus packages announced by the last UPA government.

The meeting will also take stock of the annual financial performance of the PSU banks and financial institutions. The high-profile meeting will be held in the backdrop of the annual monetary policy by the Reserve Bank of India (RBI) and moderation in the economic growth during 2008-09. India managed 6.7% economic growth in 2008-09 and a 5.8% growth rate during the last quarter of the fiscal. Last week, SBI chairman O P Bhatt had said, there is scope for 25 basis point cut in the interest rates. “We will take a view after (bankers’ meeting with finance minister), he said. There is enough liquidity. Credit is not strong at this point of time but it is expected to pick up during the year,” he said.