Lower lending rates to spur economic activity: FM tells banks

10 June 2009

Finance minister Pranab Mukherjee today asked banks to cut lending rates and provide cheaper credit to industry in order to spur economic activity.

Addressing chief executives of public sector banks, Mukherjee said the banks have to stand by to provide credit at reasonable rates, especially when the financial scenario has improved.

He said the scenario, both domestic and global, now is far better than the one prevailed eight or 10 months ago and that the government is committed to provide an atmosphere that is conducive to overall growth of the economy.

''For the economy to prosper, the business has to flourish. Our role is to provide an enabling environment for the business to flourish by way of various pro-growth policy announcements. As a financial intermediary, the banks have to standby to provide credit at reasonable rates. This is an area of concern in many quarters both within the government and outside,'' the finance minister said.

He also pointed to bank lending rates staying put despite a series of reductions in the Reserve Bank's policy rates.

''It is said that the reduction in key rates by RBI is not getting adequately reflected in the reduction of BPLR of banks. I would urge the banks to address these concerns expeditiously and in adequate measure. This will help restore the environment for rapid growth and ensure that the growth process benefits all our people,'' he said.