The Hindu Business Line : Chidambaram to meet public sector bankers on May 1

Mumbai, April 19 The Finance Minister, Mr P. Chidambaram, has called a meeting of public sector banks on May 1, just a day after the RBI’s scheduled annual monetary policy announcement.

Chairmen of PSU banks who got the intimation say that they are yet to receive the agenda, but think that the meeting could be mainly to ascertain their views and action plans in the context of the measures being taken to combat inflation.

On April 17, RBI hiked the cash reserve ratio by 50 basis points as part of its steps to anchor inflation expectations.

The Government had also initiated measures to stem the spiralling prices.

A section of analysts and bankers expects further steps towards monetary tightening in RBI’s annual policy statement on April 29, as inflation is still ruling above 7 per cent, which is higher than the RBI’s accepted rate of 5 per cent.

Mr T.S. Narayanasami, Chief Managing Director of Bank of India, said that the meeting could be a general one to get a feel from banks about the impact of the monetary policy.

“The Finance Minister perhaps wants to discuss how interest rates will move and the role of credit growth to support GDP,” he said.

Any increase in key interest rates could force banks to hike lending rates, which could affect investment and economic growth.

This would not be welcomed by the Finance Minister, who had in his meeting with banks earlier this year asked for them to cut lending rates to help spur investments and economic growth.

A banking analyst said the Finance Minster normally calls for a meeting of public sector bankers for review of their performance.

But, May 1 would be too early for such a review as all banks would not have come out with their results by then.

Main focus

Though other issues would be discussed, the main focus in the meeting would be bankers’ response to RBI’s monetary measurers, the analyst said.

Global investment bank, Goldman Sachs said on Friday that they expect RBI to hike repo rate by 50 basis points on April 29, “as inflation level is at politically unacceptable levels and money supply is still north of 20 per cent”.

More Stories on : Public Sector Banks | Credit Policy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Chidambaram to meet public sector bankers on May 1

‘Citigroup will continue to invest in India’