Why are banks not cutting rates? Arun Jaitley to take up issue with PSU bank chiefs today

Finance Minister Arun Jaitley will meet the heads of public sector banks (PSBs) on Wednesday to review their performance, particularly with regard to passing on the Reserve Bank of India’s recent interest rate cuts to borrowers. “During the meeting, the finance minister will review the public sector banks’ performance with regard to overall credit growth,” a finance ministry release said on Tuesday. “The finance minister will also review the performance of PSBs and financial institutions (FIIs) with regard to the new projects and proposals, stalled projects and possible remedial measures among others,” it added. Jaitley will also review the banks’ performance in their handling of non-performing assets (NPAs) or bad loans, the ministry said. [caption id=“attachment_2147223” align=“alignleft” width=“380”]  Jaitley will also review banks’ performance in their handling of NPAs[/caption] The RBI has cut the repo rate at which it lends to commercial banks by 0.5 percent in the last two months, but the banks have not followed up on that yet by reducing their lending rates. Last week, the RBI reduced the repo rate from 7.75 percent to 7.5 percent. This was the second rate cut after January 15, when the central bank had also cut the rate by a similar 25 basis points. At Wednesday’s meeting, Jaitley would also review the progress made on decisions taken at the two-day Gyan Sangam bankers retreat held in Jamuary in Pune. The meeting would review various key financial sector issues such as credit offtake in the economy, priority sector lending, and progress made under the Pradhan Mantri Jan Dhan Yojana (PMJDY). Prime Minister Narendra Modi last year launched the PMJDY scheme for promoting financial inclusion. A record 13.6 crore bank accounts have been opened under the scheme. IANS