New Delhi, June 10 (IANS) Finance Minister Arun Jaitley will meet heads of public sector banks on Friday to persuade them to pass on Reserve Bank of India’s (RBI) rate cut benefit to borrowers to stimulate growth.
The meeting will also review the banks’ credit offtake and the progress made under the Jan Dhan Yojana and other social security schemes, an official source told IANS on Wednesday.
In three separate cuts this year, the RBI has reduced the repo rate, at which it lends to commercial banks, by 0.75 percent. But not all the banks have passed on the benefit of lower interest rates to customers.
Last week, RBI reduced the short-term lending rate from 7.5 percent to 7.25 percent.
“Our policy is neither too conservative, nor too aggressive — but just right for the given moment,” RBI Governor Raghuram Rajan said at a post-review press conference, and made it clear that he would like to see the commercial banks passing on the rate cuts down the line.
In April, Rajan said banks have to pass on the previous rate cuts, and dismissed claims that cost of funds remained too high.
The source said the finance minister would also take up the issue of non-performing assets (NPAs), or distressed loans, and discuss ways to contain this.
Gross NPAs of PSBs have gone up to Rs.260,531 crore as on December 2014.
In this connection, the top 30 defaulters account for bad loans of Rs.95,122 crore, which is more than one-third of the entire NPAs of public sector banks.