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Crisis: Cabinet Secy to meet bankers, chambers tomorrow
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April 01, 2009 15:21 IST
Last Updated: April 01, 2009 15:54 IST

The government will take stock of interest rates and credit growth on Thursday when it meets industry chambers and bankers, as India Inc has demanded cuts in interest rates and higher loan disbursal to tackle industrial slowdown.

The meeting between Cabinet secretary K M Chandrasekhar and heads of banks along with representatives of chambers will be held at a time when almost 50 per cent of PSU banks have reduced their benchmark lending rates effective from Wednesday.

Prime Minister Manmohan Singh had said there is scope for further cuts in interest rates in his meeting with industrialists last week.

The Cabinet secretary's meeting, which is taking place after the scheduled one late last month got postponed, is likely to take up issues coming in the way of industrial revival.

For the first time in about 17 years, industrial growth was negative in two consecutive months, in December and January, after it saw a monthly contraction for the first time in 15 years in October 2008.

While there are signs of revival in certain sectors like auto, cement, steel and capital goods, exports declined for the fifth consecutive month, in February.

As many as 13 state-owned banks have reduced their prime lending rates in the range of 0.25-0.50 percentage points from Wednesday, making auto loans, housing loans and other advances cheaper.

Citibank also cut its benchmark lending rate by 0.50 percentage point.

Even then, the prime lending rates stand above double-digit marks, while industry wanted them to come down to single digits.

Domestic private sector banks, however, are yet to reduce lending rates, a point that was also stressed by Prime Minister Manmohan Singh in a meeting with industrialists last week.

The RBI is slated to announce its annual monetary policy later this month.

The prime minister had also said public sector banks disbursed more credit in 2008-09 than in 2007-08, but the lending by domestic private and foreign banks got substantially reduced.

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