FM to meet chiefs of PSU banks tomorrow

Finance Minister Pranab Mukherjee will meet chiefs of public sector banks here tomorrow, at a time when industrial growth has decelerated to a 13-month low of 7.1 per cent and interest rates have moved northward.

The Finance Minister will also take stock of the financial performance of the banks and their projections for the current year, sources said.

At the same time, the meeting is expected to discuss the impact of rising benchmark prime lending rates (BPLRs), which will affect auto, home and education loan costs for existing borrowers.

Lenders like Punjab National Bank, Bank of Baroda, Oriental Bank of Commerce, Corporation Bank and IDBI have hiked BPLRs following the RBI move to raise key short-term borrowing and lending rate by 50 and 25 basis points, respectively.

Since July, the system of BPLR has been replaced by a base rate, which is a floor for lending rates. However, existing customers are linked to BPLR unless they decide to switch over to the base rate system.

Mukherjee will also dwell upon credit flow to productive sectors as well as to priority sector, sources said.

The meeting takes place at a time when most of state-owned banks have announced their first quarter results.

The agenda of the meeting also includes review of credit growth, including to the agriculture and infrastructure sectors, sources said.

Among others, capital adequacy over the medium-term and housing and education loans would also be taken up in the meeting, sources said, adding that even the capital infusion by the government to banks could be discussed.

One of the key points of discussion in the meeting would be financial inclusion to provide appropriate banking facilities to habitations having a population above 2,000 by March, 2012.

It is to be noted that the Finance Minister had a meeting with bankers and chief ministers of four regions. The fourth and last in the series of regional meetings held by Mukherjee was on July 20.