The public sector banks on Monday assured the acting Finance Minister Pranab Mukherjee to cut the interest rate in loans and deposits by more than 50 basis points (bps) or 0.50% very soon.
"As deposit rates have moderated, there is general expectation that interest rates will come down," Arun Ramanathan, Finance Secretary informed the reporters after concluding the meet.
The decision in the rate cut has come in the wake of Reserve Bank of India (RBI)’s move to cut the rate in repo, reverse repo, CRR and BPLR last year in phased manner to confront the global meltdown.
Some banks had slashed the interest rate on long-term loans and deposit rates but a large number of banks had not made the parity with the RBI’s move; thus the ministry had to interfere in this matter to boost the economy crisis in realty, auto and industrial sectors.
Due to higher rate of interest, ongoing recession and spiralling inflation, the reality and automobile sectors were hit sternly, which are the major pillars of economic infrastructure of the country.
The global turmoil, which had hit our country marginally, has now begun to show its deep impact on Asia’s third largest economy and country’s need to came out from this impact. For this, an economy boost is essential that can come from the blistering growth of reality, automobile and financial sector boom.
‘We must support the development of those sections which will immediately boost growth and create employment opportunities,’ said Pranab to the top officials of the banks.
‘In view of contracting global demand, we have to focus on development of domestic demand by primarily stimulating demand in the rural areas and in highly labour-intensive sectors,’ he added.
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