Pranab to meet bankers, to review rate cut

Finance Minister Pranab Mukherjee will meet heads of public sector banks on Wednesday to impress upon them the need to further moderate interest rates and also increase availability of credit to industry, suffering from the impact of the global downturn.

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

The meeting will also dwell upon infrastructure lending, capital adequacy over medium term and housing and education loans, they added.

Last month after assuming charge, the finance minister had said he will 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 said.

"One of the first steps I propose to take is to meet bankers and get them committed to a more benign plan of action," he had said.

The bankers meeting with the finance minister would also assess the impact of the three stimulus packages announced by the last United Progressive Alliance 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 and moderation in the economic growth during 2008-09.

India managed 6.7 per cent economic growth in 2008-09 and a 5.8 per cent 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 the meeting with the 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.

"There is definitely a softening bias (on interest rates). There is no chance of it going up," he said, adding, "perhaps they (interest rates) would come down."

Meanwhile, the country's largest private sector lender ICICI Bank has reduced lending rates for home, auto and other retail loans by half a percentage point to 12.75 per cent.

The bank also slashed its benchmark lending rate by 50 basis points to 15.75 per cent.