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At present, we are witnessing an investment boom. Drawdown of sanctions is taking place. We should not do anything to dampen the investment spirit: Chidambaram

WAITING FOR SIGNALS?: (From left) The State Bank of India Chairman, Mr A.K. Purwar; the IDBI CMD, Mr V. P. Shetty; the Indian Banks' Association Chief Executive, Mr H.N. Sinor; and the Union Bank of India CMD, Mr K. Cherian Varghese, at a meeting with the Finance Minister in the Capital on Friday. - Ramesh Sharma

New Delhi , Nov. 18

THE Finance Minister, Mr P. Chidambaram, has said banks are likely to ensure a stable interest rate regime during the remaining period of the current fiscal.

"By and large, banks are expected to maintain the current interest rate regime for all productive purposes such as investment in plant, machinery, civil construction and machinery imports, during the remaining part of the current fiscal," Mr Chidambaram said, while briefing the press after his meeting with Chief Executives of public sector banks here on Friday.

He said there was ample liquidity in the system to finance the productive investments.

"At present, we are witnessing an investment boom. Drawdown of sanctions is taking place. We should not do anything to dampen the investment spirit. I do not think liquidity is a problem," Mr Chidambaram said.

Fresh capital: On the need for banks to mobilise fresh capital in the wake of the impending Basel-II norms, the Finance Minister said he had requested the Reserve Bank of India to issue early guidelines that would enable banks to raise Tier-III hybrid capital.

"I have requested the RBI and banks have supported me in asking the central bank to issue early guidelines so that each bank can decide what would be the optimal route to raise capital," Mr Chidambaram said.

He said the guidelines were expected to come out "much before the end of the current fiscal."

Bank mergers: The Finance Minister said that he expected that the first merger of public sector banks would be catalysed soon.

"Sooner than later I am confident that the first consolidation will take place," Mr Chidambaram said.

He said banks were already talking to each other to explore merger possibilities and said that the primary initiative in this regard should come from the larger banks.

"Banks are talking to each other. The initiative must be taken by the bigger banks," Mr Chidambaram said.

Right to information: On the problem faced by banks in complying with the queries raised by citizens under the recently notified Right to Information Act, Mr Chidambaram said it was creating an "un-level-playing field" for the Government-owned banks.

Stating that banks were obliged to obey the legislation, Mr Chidambaram said that those seeking information should be responsible while exercising their right.

"Some of the queries are amusing and some are mind-boggling.

"While banks are obliged to obey the law, citizens must exercise their new right in a more responsible manner," he said.

NPAs: Stating that there was detailed discussion on the issue of non-performing assets, Mr Chidambaram said he had instructed banks to make efforts to ensure that the net NPAs of the PSU banks remained below 2 per cent.

Currently, the public sector banks' net NPAs are 1.81 per cent.

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