FM to ask Banks to raise credit and lower interest

On Tuesday Union finance minister Mr P Chidambaram is going to have meeting with the heads of public sector banks and is likely to come under pressure as economic growth likely to slow down to 8.7 per cent this financial year. It is expected the finance minister ask them to raise lending to the manufacturing sector and cut interest rates.

“Some public sector banks have already reduced interest rates, but other banks should also bring down interest rates considering there is ample liquidity in the system and deposit rates have come down,” official sources said.

The official sources informed that the main focus of the meeting is likely to be on “banks' role to meet Budget targets, their performance apart from credit quality and delivery to the target sectors”.

The meeting is supposed to have significance as it comes on the heels of the Reserve Bank maintaining status quo in key rates.

It is likely, the finance minister, who met RBI Governor Dr YV Reddy on Saturday, have discussed measures to moderate the possible rise in capital inflows besides steps to raise credit to the productive sectors and for consumer goods to ensure better GDP figures in the fourth quarter.

According to the advance approximation by Central Statistical Organization, manufacturing output growth is expected to slow down to 9.4 per cent this fiscal against 12 per cent in the financial year 2006-07.

It is expected in the industrial activities, construction is likely to grow by 9.6 per cent against 12 per cent last fiscal.