Finance Minister P Chidambaram on Tuesday said private sector banks will be forced to cut lending rates sooner than later due to competition from public sector counterparts.
“Public sector banks have reduced their prime lending rates by 75 basis points and extended it to all kinds of loans, like home loans and personal loans. Private sector banks at a meeting with Finance Secretary had said they will also follow the suit. But they have not,” Chidambaram told a press conference organised by Delhi Pradesh Congress Committee.
It may be recalled that in response to the measures taken by the Reserve Bank to ease liquidity situation, PSU banks slashed their prime lending rates by 75 basis points, but the private sector banks are yet to make a move in this regard.
The Finance Minister added, “They have their own reasons. I am not commenting on those reasons, but I have no doubt in my mind that competition from public sector banks will force private sector banks to reduce their lending rates sooner than later…it will happen sooner than later.”
Taking a dig at BJP ahead of the assembly elections in Delhi on November 29, he criticised their proposal during the NDA rule to bring down government equity in public sector banks from 51 per cent to 33 per cent. He wondered as to what would have happened had that proposal been implemented.
While maintaining that “our banks are 100 per cent safe”, the Finance Minister said, “Even though flow of foreign capital into India has slowed down, it will eventually reverse and rupee will find its true level as India remains the most attractive investment destination.”