Finance minister P. Chidambaram on friday said that interest rates will remain attractive to depositors as well as borrowers. The finance minister also said that Reserve Bank of India will address the issue of shortage of lendable money in the system. The finance minister said, "interest rates will remain attractive to both depositors and borrowers." Mr Chidambaram said this on the sidelines of a Punjab National Bank (PNB) function.
Stating that RBI is aware of the issue of liquidity, the finance minister said that he is confident that RBI will address the issue of supply side of the credit. He said that RBI has already taken the first step to tackle liquidity by allowing banks to raise NRI deposit rates by 25 basis points. Mr Chidambaram said the RBI governor was competent enough to tackle the issue of credit shortage.
The finance minister said that higher interest rates reflect increase in demand for credit in the economy. He added, "no one in the government can say rising credit demand is bad or too much."
Pointing out that the demand for credit reflects the need of different sectors of the economy, the finance minister said the issue that is to be addressed is the supply side of the credit.
Earlier in the week, RBI had permitted banks to offer London Inter-Bank offered rates on dollar deposits of NRIs, called FCNR deposits.
Stating that RBI is aware of the issue of liquidity, the finance minister said that he is confident that RBI will address the issue of supply side of the credit. He said that RBI has already taken the first step to tackle liquidity by allowing banks to raise NRI deposit rates by 25 basis points. Mr Chidambaram said the RBI governor was competent enough to tackle the issue of credit shortage.
The finance minister said that higher interest rates reflect increase in demand for credit in the economy. He added, "no one in the government can say rising credit demand is bad or too much."
Pointing out that the demand for credit reflects the need of different sectors of the economy, the finance minister said the issue that is to be addressed is the supply side of the credit.
Earlier in the week, RBI had permitted banks to offer London Inter-Bank offered rates on dollar deposits of NRIs, called FCNR deposits.