Keep home loan rates static: FM to public banks

Finance Minister P Chidambaram today asked public sector banks to hold housing loan interest rates at current levels.

Talking of educational loans, Chidambaram said banks have been asked to reduce the difference in interest rates of various banks. Meanwhile, education loans increased to Rs 12,337 crore, posting a growth of 31%, he said.

Allaying fears of high rate of default among home loan customers, the finance minister said banks have reported around 99% recovery in home loans. He said only a few fraudulent borrowers in home loan segment were causing an increase in non-performing assets (NPA).

Banks have also reported increase in NPA in the credit cards segment, he said, adding that after the new provisions this is likely to moderate.

State-run banks have also assured the government that they would bring down their NPA below 1.32% of total advances, he said, adding that they have ample liquidity and some progress has been made in rebalancing their portfolio as well.

The government has also taken up the issue of money laundering and annual information returns on Bank Cash Transaction Tax, as there have been delays by some banks, he added.