FinMin circular on cheap loans and its impact on industry

In an move to boost sales of two wheelers and consumer durables , the finance ministry  today announced that it will provide additional capital to the public sector banks so that they can offer cheaper loans to these sectors. However companies in the sector are divided while some say it will improve market sentiment others say it will  not give a  major fillip to consumer demand and sales. Currently the government has provided for Rs 14,000 crore to the PSU banks as pegged in the Budget for 2013-14. The aim is to spur demand for shoring up economic growth, which fell to a four-year low of 4.4% in the first quarter of 2013-14. The decision in-principle was taken at a meeting between Finance Minister P Chidambaram and RBI governor Raghuram Rajan. Economic affairs secretary Arvind Mayaram was also present on the occasion. 

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