FM asks banks to cut rates

OUR SPECIAL CORRESPONDENT

P. Chidambaram in Mumbai on Thursday. (PTI) Mumbai, June 6: Finance minister P. Chidambaram today asked banks to pass on the RBI's rate cut benefits to corporate and retail borrowers. Chidambaram said commercial banks had cut interest rates only 30 basis points, while the Reserve Bank had brought down the repo rate 125 basis points since March 2012. The RBI in its recent May 3 monetary policy cut the repo rate 25 basis points to 7.25 per cent. However, nearly all the banks refused to pass on the benefits to the borrowers. The repo rate is that at which the RBI provides liquidity to banks. Addressing senior bankers at the annual general meeting of the Indian Banks' Association, the finance minister asked the lenders to advise their customers not to invest in gold. "Banks have a role to play in dampening the enthusiasm for gold. I would urge all banks to advise their branches not to encourage their customers to invest in or buy gold," he said. The request came only a day after the government raised the import duty on the yellow metal to 8 per cent from 6 per cent to check demand. Chidambaram said the rise in gold imports had significantly contributed to an increase in the current account deficit (CAD), and imports had risen after prices of the precious metal declined in the international market. "In April, we imported 142 tonnes of gold, in May we imported 162 tonnes. Last year's monthly average was 70 tonnes. This year, in the first two months, the average is 152 tonnes," he said, while asking how these imports would be financed. Large projects A committee headed by Anil Swarup was today appointed to re-start 215 large projects worth over Rs 7 lakh crore that have been stalled for various reasons, Chidambaram said. The panel will look at ways to get the projects off the ground at the earliest. "After extensive discussions today, the Prime Minister has approved the appointment of a very senior officer to the cabinet secretariat, Anil Swarup, to track these 215 stalled projects." http://www.telegraphindia.com/1130607/jsp/business/story_16981048.jsp#.UbHuxtKBlA0