Finance Minister, Mr Pranab Mukherjee, urged banks to enhance credit flow to employment-generating sectors at a meeting with the CEOs of north-based public sector banks in Delhi.
The minister mentioned that banks should take advantage of the upcoming busy season and enhance credit flow to sectors such as agriculture and micro and small enterprises. He said that in order to meet the current year priority sector lending target for agriculture credit, the banks need to enhance the credit flow to agriculture for subsequent quarters of the financial year.
He asked the banks to use the scheme announced by the Government, which allows an additional 1 per cent subvention on interest to farmers who pay their dues on time, to improve repayments.
Mr Mukherjee advised banks to pay attention to house loan borrowers asking for Rs 10 lakh loan for units worth Rs 20 lakh, highlighting the fact that PSBs play an important role in providing housing loans up to Rs 20 lakh under the priority sector lending.
The heads of the banks seemed confident that the interest rates would not go up this financial year. After the meeting, Mr T.Y. Prabhu, Chairman and Managing Director, Oriental Bank of Commerce, said that interest rates are unlikely to go up for this financial year. Similiarly, Mr K. R. Kamath, Chairman and Managing Director of Punjab National Bank, said that “Interest rates should be stable till March 2010.Infrastructure and education loans though would increase by the end of the financial year.”