Mumbai:
The government has asked bankers to review their interest in order to spur demand
in key sectors such as automobiles and housing and stimulate growth. Finance
minister P Chidambaram had taken up the issue of high interest rates with bankers
at a meeting that included representatives of automobiles, auto components and
paper industry, Maruti Suzuki India managing director Jagdish Khattar said after
the meeting. "He
asked bankers to have a re-look at interest rates in order to stimulate demand.
Costs of auto industry have increased and everybody understands there is a problem
and it has to be rectified," Khattar said. Tata
motors managing director Ravi Kant also said the auto industry raised the issue
of high interest rates that has resulted in declining sales during the meeting.
Punjab National
Bank chairman and managing director K C Chakrabarty, meanwhile, admitted that
the rising interest rates was a matter of concern. "We
will try to find out ways and means how their problems can be addressed,"
he said, but declined to commit if PNB would cut rates anytime soon. "Interest
rate is not the only solution. We can look at various mechanisms, such as delivery
in order to create positive sentiments," Chakrabarty added. SBI
chairman O P Bhatt, however, said interest rates are likely to remain stable at
least till the mid-term review of monetary policy by the RBI on October 30. ICICI
Bank CEO and managing director K V Kamath said banks had their own problems, which
needed to be addressed. "Deposit
rates have not come down," he said, adding bankers need to find ways to stimulate
overall demand after considering their own problems. The
automobile industry has been going through one of the toughest years with demand
slowing down as interest rates kept increasing. While
admitting that banks` cost of borrowing has also increased, Khattar said the solution
to the slowdown in demand of the auto industry was with the bankers. "We
ourselves have been doing whatever we can to keep sales going. In fact, this year
our marketing expense will be 50 per cent more than last year," he said.
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