Source :The Hindu :Aug 11,2010
NEW DELHI: Finance Minister Pranab Mukherjee will meet public sector bank chiefs on August 14 and is likely to discuss the impact of the hike in lending rates for existing borrowers by banks following the Reserve Bank of India's monetary tightening steps.
Sources said the meeting would discuss the impact of a number of banks raising their benchmark prime lending rates (BPLRs), which would affect auto, home and education loan costs for existing borrowers.
Lenders like Punjab National Bank, Bank of Baroda, Oriental Bank of Commerce, Corporation Bank and IDBI hiked BPLRs following the RBI move to raise key short-term borrowing and lending rate by 50 and 25 basis points, respectively, to control double-digit inflation.
Since July, the system of BPLRs has been replaced by a base rate, which is a floor for lending rates. However, existing customers are linked to BPLR unless they decide to switch over to the base rate system.
Sources said the Finance Minister will also take stock of the financial performance of the banks and their projections for the current year.
He will also dwell upon credit flow to productive sectors, sources said.
The agenda of the meeting also includes a review of credit growth, including to the agriculture and infrastructure sectors, and banks' networks in unbanked blocks, sources said.
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