FM asks banks to re-look at interest rates to spur growth

New Delhi, Oct 5 (UNI) Concerned at the sharp slowdown of industrial growth in July, Finance Minister P Chidambaram today in a meeting with leading bankers and industrialists enjoined upon them to work in cohesion to generate more demand by taking recourse to right product pricing and offering more financing options.

Mr Chidambaram asked the bankers to have a re-look at their interest rates with a view to stimulating growth. The Finance Minister wanted the banking community to help create a positive sentiment among entrepreneurial class.

The Finance Minister was categorical that the momentum of industrial growth should not be vitiated and all steps need to be taken to catapult the growth rate of the industrial sector. A slow down could impact on the growth rate of the economy.

The Joint meeting in North Block, was aimed at sorting out the grievances of the bankers and industrialists which stood in the way of rapid industrial growth. The meeting included leaders of auto and paper manufacturing industry and public and private sector banks.

The captains of industry were unequivocal that high interest rates were hurting the industrial sentiment and growthby raising costs.

The Index of Industrial production registered a growth rate of 7.2 per cent in July this year compared to 13.2 per cent a year ago. The manufacturing sector growth slowed down to 7.2 per cent in July compared to a growth rate of 9.8 per cent in June and 11.7 per cent in May this year.

The banking community is of the view that the impact of the monetary tightening measures by the RBI is now taking its toll on certain industrial segments and lower off take of credit. Some argue that the RBI needs to ease up on its tight monetary policy The almost secular rise of the value of th rupee and te manner in which it is hitting exports also figured in the discussions.

The meeting was attended among others by State Bank of India CMD O P Bhatt, ICICI CMD K V Kamath, PNB CMD K C Chakravarty, Bank of India CMD P S Narayanasamy, Maruti Udyog CMD Jagdish Khattar, Tata Motors CEO Ravi Kant, Mahindra and Mahindra Executive Direct Bharat Doshi and BILT Chairman Gautam Thapar.

UNI