Chidambaram to ask banks to consider slashing interest rates
Karaikudi (PTI): Terming the Reserve Bank's latest policy package to inject more liquidity into the system as the "right signal", Finance Minister P Chidambaram on Sunday said he will ask PSU banks to consider lowering lending rates.
In an exclusive interview to PTI, the Minister said he would take the issue of interest rate cut "forward" during a meeting with chairpersons of public sector banks in Delhi on November 4.
"I am happy with the policy package announced by the RBI. When it announced its (peak season) policy on Oct 24, the RBI had promised swift action in case it is necessary to infuse more liquidity.
"I am happy that the the RBI has responded swiftly," he said in his reaction to yesterday's policy package announced by the central bank.
In a slew of announcements, the RBI had yesterday cut the repo rate (the rate at which it lends to banks and is a signal to banks to reduce their rates) by 50 basis points to 7.5 per cent, cash reserve ratio by 100 basis points to 5.5 per cent and the statutory liquidity ratio by 100 basis points to infuse an additional Rs 85,000 crore into the system.
The central bank had already injected in October additional liquidity of Rs.1,85,000 crore in the wake of global financial crisis and depression in the US that had spread fears in India of a recession and brought in volatility in the stock markets.
Chidambaram said the RBI's policy was also a signal to the banks that they should now now consider lowering their interest rates.
Meeting with chiefs of PSU banks on Tuesday
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.
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