Economic Times

Mumbai, Nov 4: Banking stocks picked up steam after PSU banks reached a consensus to cut interest rates on advances by 75 bps, while on deposits by 50 bps. 

Finance Minister P Chidambaram met bankers to consider lowering interest rates, held wide-ranging consultations with the bank executives relating to impact of the global meltdown on the Indian banking sector and consider various steps to overcome the challenge.

The meeting comes a day after the captains of Indian industry met Prime Minister Manmohan Singh and demanded steps for enhancing the liquidity and steps to create environment conducive for lowering of interest rates.

SBI Chairman O P Bhatt, PNB chief K C Chakrabarty, Bank of Baroda Chairman M D Mallya, Canara Bank head A C Mahajan, UCO Bank CMD S K Goel were among those who attended the meeting, where top officials of the Finance Ministry and RBI were also present.

Among the banks that have announced reduction in benchmark prime lending rates by 50 basis points include the country's third largest lender, Punjab National Bank, and other banks like UCO Bank, IDBI Bank and Union Bank of India.

Among PSU banks, SBI shares soared 6.57 per cent, Punjab National Bank was up 7.22 per cent, Bank of Baroda climbed 11.38 per cent and Union Bank rose 10.05 per cent. Private banks ICICI Bank rose 7.03 per cent and Axis Bank climbed 5.03 per cent.