Pranab advises banks to cut interest rates further

A day after announcing Rs 30,000 crore tax relief, Finance Minister Pranab Mukherjee today said he has advised the RBI and banks to take risks and be courageous to further bring down interest rates to stimulate the economy reeling under the global meltdown.

"I have shared my concern with the RBI Governor. I also met the banks. The prime lending rate (PLR) is still high and industry is complaining...Be little more courageous... Take risk without indulging in financial profligacy," he said replying to a debate on the Interim Budget in the Rajya Sabha.

Mukherjee had spoken to RBI Governor D Subbarao on Monday and discussed how to meet the industry's demand for more liquidity at lesser cost.

"The government will not abdicate its constitutional responsibilities and will constantly monitor and whatever is required we will do within the realm of possibilities," he said

The government had yesterday announced two per cent reduction in general excise duty and service tax to boost the domestic demand for goods and services.

Though the industry welcomed the tax cuts, it wanted more reduction in the interest rates. Banks have already reduced the rates but the PLR remains high as Mukherjee said.