Loans to get cheaper, Govt banks begin first

Meanwhile, the Reserve Bank of India continued with its liquidity-infusion measures by announcing a plan to purchase of Rs 10,000-crore worth bonds issued under the market stabilisation scheme. The MSS bonds were issued through last year to suck out excess rupee liquidity following the RBI8217;s sterilisation of dollars at a time when India was flooded with copious capital inflows.

After a marathon four-and-an-half hour meeting with state-owned bank chiefs, Chidambaram said, 8220;I have impressed upon them that it is not sufficient to create liquidity and provide liquidity. It is important to deliver it at a price at which the credit will actually flow.8221;

The minister singled out the housing sector and small and medium enterprises and asked banks to ease credit availability to these sectors since they were major growth drivers for the economy. In fact, the RBI is considering the proposals of Sidbi and National Housing Board to provide them an additional Rs 10,000-crore line of credit each, he said.

Talking to reporters, SBI Chairman OB Bhatt said his bank would cut its PLR by 50 basis points to 13.25 per cent tomorrow. Other banks followed suit see box. Finance Secretary Arun Ramanathan is scheduled to meet domestic and foreign private bank CEOs tomorrow to ensure that liquidity and interest-rate issues are addressed by them too. Banks told Chidambaram that the demand for bank credit was very high since other sources of finance were not available to corporates now. Until October 10, non-food credit grew 29 per cent. The minister said he had sought a fortnightly report on the credit growth from banks. 8220;We are monitoring the situation on a 24 by 7 basis,8221; he said.

RATE CUTS START

8226; SBI: 50 basis points to 13.25 per cent; cut tomorrow

8226; Bank of Baroda, Bank of Maharashtra: 75 bps

8226; Central Bank: 100 bps

8226; Indian Bank: 50-75 bps

8226; PNB, Union Bank of India: Already cut PLRs by 50 bps to 13.5 per cent

8226; IDBI Bank: 50 bps on home loans to 11 per cent

8226; Syndicate Bank: 75 bps to 13.25 per cent

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