In a bid to give some respite to corporate India and stimulate demand and growth in the festive season, Finance Minister P Chidambaram on Friday asked bankers to take another look at their lending rates.
He also asked industrialists to price their products properly so that there was no let up in demand during the busy season. He wanted them to devise attractive financing options for customers in cooperation with banks.
The message was conveyed during a meeting Chidambaram chaired with the chiefs of commercial banks and representatives of India Inc, especially from areas such as automobiles and auto components that are witnessing some stagnation.
"Everybody understands there is a problem. It has to be rectified," said Jagdish Khattar, managing director of India's largest carmaker Maruti Udyog Ltd, after the meeting. "The finance minister wants banks to re-look their interest rates."
The meeting took place in the backdrop of overall growth in index of industrial production declining to 7.1 per cent for July, after remaining in double digits for the past five quarters.
The top brass of Tata Motors had gone to the extent of saying there was a conscious effort by the government to curb inflation by raising interest rates, which affected the automobile and the real estate industry the most.
"Last year, we had phenomenal growth in the festive season. It'll be difficult to meet similar growth numbers now. I won't single out any player in this regard," said Rajiv Dube, president for passenger vehicles with Tata Motors.
"We will try to find out ways and means how these problems can be addressed," said KC Chakrabarty, chairman and managing director of the state-run Punjab National Bank, after the meeting with the finance minister.
But OP Bhatt, chairman of the State Bank of India, India's largest commercial bank, and KV Kamath, CMD of ICICI Bank, the largest in the private sector, said interest rates would remain stable till the monetary policy is reviewed on October 30.