Economy needs more incentives: SBI chairmanDecember 11th, 2008 - 5:36 pm ICT by IANS
New Delhi, Dec 11 (IANS) India’s largest bank State Bank of India (SBI) Thursday said the economy needed more incentives to weather the downturn than interest rate cuts and the government’s fiscal stimulus package.”We are going to review rates. There are a lot of things happening to stimulate demand in the economy. Still there is a feeling that more is required,” bank chairman O.P. Bhatt told reporters at a banking conference here.
Bhatt said the bankers would discuss measures which the country needs to boost the economy.
The Reserve Bank of India (RBI) reduced its key short term lending and borrowing rates - repo and reverse repo - by 100 basis points each to 6.5 per cent and 5 percent respectively, with effect from Monday.
Taking the cue from the country’s central bank, private banks like HDFC and Yes Bank, besides Union Bank, a nationalised bank, reduced their benchmark prime lending rate (PLR) by 50 basis points each.
Last month, SBI slashed PLR by 75 basis points to 13 percent.
The bank conference assumes significance as the government has asked the banks to work out a package for housing loans below Rs.2 million (Rs.20 lakh).
The stimulus package, announced by the government Sunday, focuses on the power, exports, housing, auto, small and medium industries and infrastructure sectors through additional funding.
The government has also cut central value-added tax by 4 percent across the board, besides earmarking Rs.200 billion (Rs.20,000 crore) additional non-plan expenditure for the remaining fiscal.