Finance Minister Pranab Mukherjee said on Wednesday that public sector banks are exploring the possibility of a further cut in interest rates after meeting their chief executives in a session aimed at goading them towards making loans cheaper and nudging them an inch closer to consolidation that would strengthen their balance sheets.
“It is said that the reduction in key rates by the Reserve Bank of India is not getting adequately reflected in the reduction of the benchmark prime lending rate (BPLR) of banks. I would urge the banks to address these concerns expeditiously and in adequate measure,” Mukherjee said.
While Mukherjee is concerned over high rates that could choke growth, PSU bank chiefs, who expect a decision on interest rate cuts within a month, say high deposit rates are a constraint.
State Bank of India chairman O.P. Bhatt said that a decision on reducing lending rates would be taken by June-end.