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FM to meet chiefs of PSU banks on Tuesday

Finance Minister P Chidambaram will meet heads of public sector banks on Tuesday in the backdrop of series of measures taken by the Reserve Bank to ease money supply.

india Updated: Nov 02, 2008 13:47 IST

Finance Minister P Chidambaram will meet heads of public sector banks on Tuesday in the backdrop of series of measures taken by the Reserve Bank to ease money supply.

It is expected that the Finance Minister would review half yearly performance of banks and implementation of debt waiver scheme and interest rate scenario, banking sources said.

The banks are expected to be asked by the government to consider cut in interest rates following a slew of measures taken by the RBI to inject liquidity into the cash-starved banking system.

RBI yesterday announced cut in mandatory cash requirement for banks and statutory liquidity ratio (SLR), the amount which banks are mandated to park in government securities, by 100 basis points each.

Following the reduction in the key reserve ratios, CRR would come down to 5.5 per cent while SLR would be 24 per cent.

Measures taken by RBI would further infuse liquidity to the tune of Rs 85,000 crore in the system. This is in addition to Rs 1,85,000 crore already injected last month.

Inter-bank call money rate has once again increased to about 20 per cent on Friday trading session indicating tight liquidity situation in the system. During the first week of October, the call money rate had gone as high as 23 per cent.