PSU banks to cut interest rates, says IBA Chairman
Heads of state-owned banks are meeting in the capital to take a view on interest rate cuts, which may be more than 50 basis points, and firm up steps to increase the flow of credit to industry, reeling under the impact of slowdown.Updated: Feb 02, 2009, 15:52 IST
Heads of state-owned banks are meeting in the capital to take a view on interest rate cuts, which may be more than 50 basis points, and firm up steps to increase the flow of credit to industry, reeling under the impact of slowdown.
"Apart from interest rates, there are other issues on the agenda like the flow of credit to productive sectors," Indian Banks' Association (IBA) Chairman T S Narayansami told reporters ahead of the meeting of bankers with External Affairs Minister Pranab Mukherjee, who is currently holding the charge of the Finance Ministry.
When asked whether the interest rates could go down by 25 to 50 basis points, he said, "It could be more", depending on the outcome of the meeting.
The bankers were going to cut interest rates, he said, adding that the timing of the rate cut would be discussed at a high-level meeting being attended by chairmen of various banks including State Bank of India, Punjab National Bank and Canara Bank and senior officials of the Finance Ministry.
Mukherjee, in his meeting with bankers, will also review the third-quarter performance, loan disbursal, and the impact of the two stimulus packages announced by the government, earlier to boost industry.
The meeting is being held in the backdrop of the third quarterly review of monetary policy by the Reserve Bank of India (RBI), which observed that most banks have reduced lending and deposit rates to some extent, but there are some that are yet to do so.
The RBI, since mid-September, has taken measures including cuts in the cash reserve ratio and short-term lending (repo) rate to inject funds into the system and signal a soft interest rate regime.