In a move to check the slowdown of credit growth in the country, Finance Minister P Chidambaram urged public sector banks to lend more to consumer durable borrowers at affordable cost.
Addressing the media after chairing a pre-budget meeting with public sector bank chiefs, Chidambaram said, “The slowdown in credit growth has affected the housing and consumer durables sector. If credit rate slows down too much, it will affect the economy.”
Chidambaram said banks have been advised to look at the loan requirements of consumer durable consumers. “There is a feeling that adequate credit is not flowing to these sectors. The government has sensitised banks to the demand of the consuming public,” he said.
Loans for consumer durables have declined 4.4 per cent in the period under review, from a growth of 11.2 per cent in the year-ago period.
As some banks, including State Bank of India, have already responded by cutting prime lending rates, other public sector lenders are expected to cut lending rates by February 20.