Mumbai: Reduction in home, auto and corporate loan rates and review of sectoral credit flows are likely to figure prominently when officiating finance minister Pranab Mukherjee meets heads of public-sector banks on Monday.
Though the Reserve Bank of India (RBI) slashed its key-rates several times since October, banks are yet to translate the full benefits of rate cuts to customers by reducing their lending rates in a significant manner.
“Banks are likely to be asked to cut their rates further, at the meeting. That apart, the government is also likely to ask banks to push lending to SMEs and NBFCs,” a senior Indian Banks’ Association (IBA) official told PTI here.
Other issues that are likely to come up for discussion in the meeting include review of sectoral credit flows to total non-food credit, housing, auto and commercial vehicles, infrastructure and agriculture.
Mukherjee is also likely to discuss the implementation status of proposals announced in the fiscal stimulus package, such as utilisation of the Rs5,000-crore refinancing facility by RBI to National Housing Bank and Rs9,000-crore to Sidbi, the official said.
The ministry is also likely to review the status of sectoral NPAs in housing and real estate, auto, SME, infrastructure and agriculture portfolios, the official said.
Announcing the third quarter review of its annual monetary policy last week, RBI had said that there was a need to improve credit flow to needy segments by cutting their lending rates.
Though most banks have reduced lending and deposit rates to some extent, a few are yet to do so, RBI governor D Subbarao had said.