Mumbai: Finance minister P. Chidambaram has called a meeting of CEOs of public sector banks on 13 August to take stock of the situation in the aftermath of Reserve Bank of India’s hike in policy rate as well as banks’ cash reserve ratio in its 29 July review of monetary policy.
Finance ministry officials have not yet finalized the exact agenda of the meeting but bankers apprehend pressure from the ministry against any aggressive rate hike.
The Indian finance minister is known for his pro-growth stance and aggressive hike in lending rates by public sector banks, that account for about 70% of the industry, will hurt economic growth.
RBI has so far this fiscal year raised its policy rate by 125 basis points and banks’ cash reserve ratio by 150 points to fight the rising inflation which is at its s13-year high. One basis point is one hundredth of a percentage point.
A few banks have raised their lending and deposit rates so far but the State Bank of India, country’s largest lender, has not yet taken any decision on this. SBI chairman O.P. Bhatt, on a overseas tour, was not available for comment.