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FM meets bankers, asks for interest rate cuts
Published on Tue, Nov 04, 2008 at 15:38, Updated on Tue, Nov 04, 2008 at 19:30 in Business section
Tags: Home Loans, Interest Rates , New Delhi
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New Delhi: In a meeting with the country's top bankers, Finance Minister P Chidambaram on Tuesday said that Government banks must reduce interest rates for loans.
This effectively will means home loan and other consumer loans EMIs could soon cost less.
Chidambaram said the Government had done its bit in bringing more liquidity into the system and now the banks must bring down the cost of credit to keep India's growth going.
“I have impressed upon them that housing and construction sector is an important growth driver,” he said.
PSU banks took the lead from Chidambaram and indicate rate cuts. Sources at the State Bank of India say cuts could come by next week.
Bank of India may also cut its rates by 50 basis points over the next three days. Few others like Punjab National Bank and Union Bank of India have already cut rates.
In fact, markets have reacted positive after FM speech with banking shares rising over seven per cent.
Meanwhile, the State Bank of India Chairman OP Bhatt said that a decision on rate cuts will be taken on Wednesday.
"Liquidity and pricing was also discussed at the meeting. There is consensus that interest rates can be reduced on lending rates. The benchmark should be between 25 basis points and 50 basis points. A decision may be taken tomorrow and would be applicable from Monday (November 10)," Bhatt said.
Here is a verbatim transcript of the FM’s interaction with the media.
Q: Are private-sector banks included in such meetings?
P Chidambaram: The Finance Secretary has called leading private-sector banks tomorrow. The Finance Secretary and the Deputy Governor of the RBI will take that meeting.
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India needs LAISSEZ-FAIRE economics.
Government\'s job is ONLY to provide freedom and JUSTICE to all it\'s
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If the FM is so concerned about the revival of Industries by forcing banks(private banks only)to cut their lending rates,how
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