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K.R.Srivats

New Delhi, Aug 3

The Finance Minister, Mr P. Chidambaram, is to meet chief executives of public sector banks here on August 13 to among other things review the performance of these banks during the recent months.

The meeting assumes significance as it comes in the backdrop of hardening interest rates following tightening of monetary policy by the Reserve Bank of India (RBI).

The RBI had raised its benchmark interest rate by 50 basis points to nine per cent on July 29, the third increase in less than two months.

Following the RBI’s move to hike repo rate and cash reserve ratio (CRR) rate, many banks had hiked their benchmark prime lending rates (PLR) and also their home loan rates.

The Finance Minister had recently, in Bangalore, asked public sector banks to mobilise more low-cost deposits to withstand pressure on their margins and keep lending rates low.

He had said that interest rates would begin to moderate in the next 6-12 months.

It has been a difficult year both for the banks and aam admi, with inflation rates near 12 per cent levels.

Indications are also that the Finance Minister may at this meeting convey to the PSB chiefs the manner in which banks would be compensated by the Government for the massive farm debt waiver and relief scheme implemented by them.

The debt waiver scheme was implemented in a record time of about 30 days.

Till date, the PSBs are not clear as to how and when they would get compensated for having implemented the scheme.

More Stories on : Public Sector Banks

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