Finance Minister P Chidambaram has called a meeting of PSU bank bosses to ask them to slash interest rates. “I have called the chairpersons of public sector banks towards the end of this month and have a chat on these issues. We will talk to the banks. I think they are cautious. Caution is good, but you can’t be over-cautious,” he said.
The Reserve Bank of India (RBI) cut interest rates by 1.30 per cent since January 2012; lending rates have dropped only by 0.30 per cent.
With factory output contracting to 2.3 per cent in April, India Inc has been clamouring for a rate cut. RBI will meet for its mid-quarter policy review slated for June 17. “What I want to tell the RBI, I tell the RBI quietly and indirectly. I like them to take correct decisions,” Chidambaram said.
Around `15,000-20,000 crore worth capital would have to be pumped into government banks every year for the next for the next five years in order to achieve global capital adequacy norms, Chidambaram said.
The entire proceeds from disinvestment would be utilised to meet the capital requirement of PSU banks.
He also said that there had been a sharp decline in gold imports and therefore there would be no further increase in customs duty for the time being. “Net gold imports averaged $135 million a day, in first 13 business days in May till May 20. However in the subsequent 14 business days, it averaged only $36 million. So gold imports have sharply come down. But I would be happy if they come down even further,” Chidambaram said.
Surging gold import has increased the widening CAD and has also weakened the Rupee.
