Mumbai: The government has asked bankers to review their interest in order to spur demand in key sectors such as automobiles and housing and stimulate growth.

Finance minister P Chidambaram had taken up the issue of high interest rates with bankers at a meeting that included representatives of automobiles, auto components and paper industry, Maruti Suzuki India managing director Jagdish Khattar said after the meeting.

"He asked bankers to have a re-look at interest rates in order to stimulate demand. Costs of auto industry have increased and everybody understands there is a problem and it has to be rectified," Khattar said.

Tata motors managing director Ravi Kant also said the auto industry raised the issue of high interest rates that has resulted in declining sales during the meeting.

Punjab National Bank chairman and managing director K C Chakrabarty, meanwhile, admitted that the rising interest rates was a matter of concern.

"We will try to find out ways and means how their problems can be addressed," he said, but declined to commit if PNB would cut rates anytime soon.

"Interest rate is not the only solution. We can look at various mechanisms, such as delivery in order to create positive sentiments," Chakrabarty added.

SBI chairman O P Bhatt, however, said interest rates are likely to remain stable at least till the mid-term review of monetary policy by the RBI on October 30.

ICICI Bank CEO and managing director K V Kamath said banks had their own problems, which needed to be addressed.

"Deposit rates have not come down," he said, adding bankers need to find ways to stimulate overall demand after considering their own problems.

The automobile industry has been going through one of the toughest years with demand slowing down as interest rates kept increasing.

While admitting that banks` cost of borrowing has also increased, Khattar said the solution to the slowdown in demand of the auto industry was with the bankers.

"We ourselves have been doing whatever we can to keep sales going. In fact, this year our marketing expense will be 50 per cent more than last year," he said.

also see : General reports on Banks & Financial Institutions