FM hints at RBI steps to spur credit flow

Speaking to mediapersons here, the minister said higher interest rates showed an increase in credit demand, which, in turn, reflected the strength and needs of different sectors of the economy.

Chidambaram admitted that there is a mismatch between demand and supply of credit as deposits had grown 16 this fiscal, while the lending growth witnessed a 30 growth.

Pointing out that the country is on a high growth path, he said, 8220;We must find a way to bridge this mismatch to keep up the investment rate but this should not stop us from riding through this high growth path.8221;

The minister pointed out that the banking system in the country finances 35 of the Gross Domestic Product as against over 70 in developed countries.

Earlier, at a press conference of Punjab National Bank PNB, the minister urged public sector banks, including PNB to 8220;embrace convergence, consolidation and competition8221; in order to gain in strength.