New Delhi: Finance Minister Pranab Mukherjee on Wednesday said banks should provide credit at reasonable rates to spur growth, saying cuts in official rates by the Reserve Bank of India had not been passed on.
"It is said that the reduction in key rates by RBI is not getting adequately reflected in reduction of BPLR (benchmark prime lending rate) of banks," he told chiefs of state-run banks.
"I would urge the banks to address these concerns expeditiously and in adequate measure," Mukherjee said. "This will help restore the environment for rapid growth and ensure that the growth process benefits," he said.
"As a financial intermediary the banks have to stand by to provide credit at reasonable rates."
The RBI, between September 2008 and April 2009, reduced key policy rates and also lowered the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), the funds banks are required to park with the apex bank and keep in government securities.
The RBI also opened special liquidity window for mutual funds and non-banking financial companies and relaxed the lending norms, but banks had still not eased their credit policies.
"I would urge the banks to address these concerns (cost and availability of credit) expeditiously and in adequate measure," he said.
These initiatives "will help restore the environment for rapid growth and ensure that the growth process benefits our people."
Noting that cost and availability of credit are areas of concern within and outside the government, Mukherjee said. "Our role is to provide an enabling environment for the business to flourish by way of various pro-growth policy announcements.
“Today we are looking at our economy with a lot of hope. The last quarter GDP growth figure of 5.8 percent and the annual growth of around 6.7 percent for 2008-09, is a pointer towards this direction," he said.
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