Heads of major public sector banks today held a meeting to consider a reduction in lending rates for the housing sector and the small and medium industries, following the stimulus package announced by the cabinet on Sunday.

The meeting was attended by finance secretary Arun Ramanathan and joint secretary (banking) in the finance ministry Amitabh Verma.

Public sector banks are expected to give final shape to the credit package for the beleaguered housing and small and medium enterprises sectors tomorrow.

''Some package would be formalised by tomorrow," IBA chairman T S Narayanasamy said after the meeting.

He said the meeting considered the extent of relief needed for housing and the SME sectors, adding, ''We still have not formed opinion (on the package).''

While the government has announced lower interest rates for housing loans below Rs20 lakh, the IBA said it wanted to make housing sector as attractive as possible.

While lending rates for for ''affordable housing'' would come down, the IBA may look at tweaking the processing fee and margin requirement. No interest rate figures have been decided for small housing loans.

While details of the package are still not clear, banks are expected to supplement the government's efforts to steer the economy out of the global financial slowdown.