New Delhi: With economic growth likely to slow to 8.7% this fiscal year, heads of public sector banks are expected to come under pressure from finance minister P. Chidambaram when he meets them on Tuesday 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,” officials said. The meeting is likely to focus on “banks’ role to meet Budget targets, their performance apart from credit quality and delivery to the target sectors”.
It follows a quarterly review of the monetary policy by the Reserve Bank of India (RBI) on 29 January, when it left key rates unchanged. Chidambaram, who met RBI governor Y.V. Reddy on Saturday, is believed to have discussed measures to moderate the possible rise in capital inflows besides steps to raise credit to the productive sectors.