New Delhi: The Indian government has asked state-run banks to review lending rates and aim for a 24% loan growth to help pump-prime a slowing economy, the country’s top bureaucrat said on Thursday.
Cabinet secretary K.M. Chandrasekhar, who reviewed the credit situation at a meeting with bankers and industrialists, said some sectors were still facing loan shortages. He said state-run banks had stepped up lending and a “growth rate of about 24% in the credit is anticipated this year”.
Bank loans were up 18% by early March year-on-year, central bank data showed. Since October, it has cut its benchmark lending rate by four percentage points in five stages, while the government has rolled out a series of fiscal stimulus measures to limit the impact of the global financial crisis on the country.
“We are here in a situation where all of us have to work together and we have to see...to what extent we can bring it (interest rates) down together,” Chandrasekhar said.
Officials of industry lobby groups present in the meeting said there was a scope for banks to further lower lending rates by 50-100 basis points. One basis point is one-hundredth of a percentage point.
“One point that came out very clearly from the industry was that the stimulus packages are working,” Chandrasekhar said.