To provide a much needed boost to investments, Finance Minister P Chidambaram today asked banks to cut interest rates and keep EMIs at affordable levels so that sales of consumer goods will be encouraged and manufacturing will kick-start soon after.
Well aware of the slump in the Indian economy, Chidambaram met with the chiefs of public sector banks to reschedule and revise certain procedures. Farm loans, especially those in drought affected states, will be revised to provide easy sanction. Education loans will also see a positive revision.
Keeping in mind the contribution of the banking sector to the economy, Chidambaram has directed the banks to double the number of ATMs in the next two years and also enable them as cash accepting machines so that the money remains in the banking system.
"These are issues which have been identified as inhibiting. I will take up the issues with ministries concerned. Once we get the investment cycle going, once we get the investment engine started many of our problems can be solved. We have asked the banks to focus on sectors that deserve credit," the minister said.
Asserting that the EMIs should be kept at affordable levels, Chidambaram said, "the middle class is complaining about increasing EMIs and stretching payment cycle. The middle class, which consumes consumer durables postponing purchases, and that is not good for the industry".
He mentioned the cycle of affordable EMIs , purchasing of cars, refrigerators, washing machines, cooking ranges, etc. and the boost to the manufacturing sector which will help revive the economy.