PC may pressure bankers to turn up growth

Finance minister P Chidambaram is slated to meet chiefs of state-owned banks on August 18 to take stock of the banking sector. Mahua Venkatesh reports.

Finance minister P Chidambaram is slated to meet chiefs of state-owned banks on August 18 to take stock of the banking sector.

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Chidambaram is expected to direct bankers to increase credit flow to revive the sagging economy, especially after industrial growth declined by 1.8% in June.

"We need credit and banks must be geared up to provide the required funds," a senior finance ministry official told Hindustan Times on the condition of anonymity.

"This is critical at this juncture and the issue would be highlighted in the forthcoming meeting," he added.

The finance minister recently underlined the need to take steps to reduce interest rates.

"Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and ease the burden on consumers," he said.

The credit growth in the current fiscal is expected to be 15-17%, said banking sector analysts.

Several banks including State Bank of India have been downgraded by rating agencies.

Banks are also worried as the partial drought would push up non-performing asset levels.