FM asks PSU banks to lend more

Admitting that deliberate moderation in credit growth has partly affected flow of advances to housing and consumer durables sectors, Finance Minister P Chidambaram asked state-run banks on Tuesday to ensure adequate loans to these areas of the economy.

"There has been (a) slowing down of credit growth... However, this slowing down of credit has indeed, to some extent, affected flow of credit in the housing sector and consumer durables sector," he told reporters after a review meeting with heads of PSU banks.

He said these issues came to the fore during the discussion he had with the bankers and they have been advised to pay attention to the requirement of credit for home seekers and to those who would like to buy consumer durables and consumer non-durables.

Some banks have already begun moving in that direction, he said expressing the hope that banks will pay attention to credit delivery as well as credit quality to these sectors over the next few days.

SBI, HDFC, Canara Bank, PNB Housing Finance and Bank of India have already announced a cut in lending rates.

However, Chidambaram said slowdown in credit growth has not affected flow of advances to productive sectors of the economy.