New Delhi: The government should direct commercial banks to cut lending rates by at least 2 per cent to encourage corporates to increase borrowing from them, instead of tapping other sources, Assocham said on Monday.
Corporates have started devising alternate means to
access liquidity to support their diversification plans to
channels like private equity, venture capital and mutual funds
in absence of the fact that commercial banks are refusing to
adhere to softer lending regime, the chamber said.
"Despite the fact commercial banks are flushed with
funds, credit offtake has not been happening as intended and
therefore, there is a strong case to reduce lending rates by
at least 2 per cent," it said, adding that banks lending rates
vary at 12-15 per cent as of now.
About Rs 1,50,000 crore money of commercial banks is
parked with RBI in the form of repo rate (the rate at which
banks borrow from RBI), it said.
Growth in deposit rates has gone up by about 22 per cent
up to October against their credit offtake of around 9 per
cent up to the corresponding period, Assocham President Swati
Piramal said.
"These accumulated funds have limited income unless lent
and such funds can be flushed out provided there is a taker
for them," it added.
Bureau Report
First Published: Tuesday, November 17, 2009, 00:17