FM suggests cut in interest rates & lower EMIs to revive economy

Finance Minister P. Chidambaram has asked the banks to cut interest rates, aggressively expand their operations and extend credit to vital sectors to revive economic growth. Briefing the media after meeting the Chief Executives of Public Sector Banks and Financial institutions in New Delhi, Chidambaram urged the banks to lower the EMIs of loans to encourage sale of consumer durables to restart the engine of manufacturing.

Finance Minister also announced rescheduling of farm loans in drought affected states. Credit will be provided to farmers for fodder and to maintain their cattle, assistance will also be given to raise alternate crops. 11.5 crore Kissan debit cards are also being replaced by Debit - cum - ATM cards.

Chidambaram also announced that procedures will be revised for easy sanction of education loans to students. Strict action will be taken against Branch managers, who deny loans to eligible students.

He wanted the banks to focus on sectors crying for credit and also identify issues hampering investment. He said reviving investment is the key to churning the engine of economic growth. He asked the Industrial houses to bring forward implementation of their projects to accelerate economic growth.

Pointing out that 11 lakh crore lies as cash in the hands of people, Chidambaram asked the Banks to mobilise savings. He said, ideal banking would be to have them in the banks. Chidambaram said, the banks have been advised to double the number of 63000 ATM's in the country and also convert them into cash accepting machines as well.

Chidambaram also said, he is proud of the Indian banking Industry and PSU Banks continue to remain healthy to function on a viable basis. He also said, non performing assets of the banks have remained marginal in 2012 march, reflecting the slow down of the economy. But, he said, its level is not alarming and will improve as the economy picks up.