Jaitley To Woo PSU Banks To Lower Interest Rates

Government is seemingly quite concerned about the lack of demand and uptick in growth activity on ground, despite its efforts during last one year. On one hand, finance ministry is leaving no opportunity to persuade RBI to lower down interest rates and on the other it has now put focus on banks to anyhow lower the lending rates and pass the benefit to the consumers, so that consumption cycle will get the boost.

With this objective finance minister Arun Jaitley would be meeting heads of all PSU banks today and will persuade them to lower interest rates particularly in housing, infrastructure, manufacturing and priority sector lending. Important to note that on June 2 RBI has slashed repo rate by 25 basis point, its third cut during this year, but despite that banks particularly PSU banks, didn’t pass the benefit to the end consumers as they are quite skeptical about the growth prospects and rising NPA concerns. Jaitely would review the performance of banks and financial institutions for the year ending March 2015.

He will also review the performance of banks with regard to their performance in overall credit growth with particular reference to Agriculture Credit, MSE Credit, Education Loans, Housing Loans and NPAs. Review of progress of three social security schemes viz. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY) will also be done. FM would also take note of the progress of Micro Units Development & Refinance Agency (MUDRA) bank during the meeting. Finance ministry sources said that banks have their own concerns and grievances for lowering the interest rates, which FM would try to redress and putting growth engine back on track. Jayant Sinha, Minister of State for Finance and Hasmukh Adhia, Secretary, Department of Financial Services would also be present in the meeting.