Finance Minister P. Chidambaram Saturday called for increased consumer spending as a booster shot to the sagging economy and asked bankers to lower EMIs (equated monthly installments) for consumer durable loans.

He said one of the factors inhibiting the growth of the consumer durables industry was the EMIs which should be kept at an affordable level.
The finance minister said the middle class is complaining that the EMIs had increased or the period of payment had been stretched.

“The middle class which is the consumer of consumer durables postpones the purchase and that is not good for industry, economy. Just as investment plans must be brought forward, consumer must be encouraged to buy consumer durables that is what will keep the engine of manufacturing going,” he said.

“Consumer durables are the products which keep the production in the manufacturing industry going. Nearly the entire SME industry is dependent upon consumer durables because they supply parts and accessories.

EMIs must be kept at an affordable level so that people will buy two-wheelers, buy cars, buy refrigerators, buy washing machines, cooking ranges,” Chidambaram added.
After meeting the heads of public sector banks here, he said most of the country’s economic problems will be solved once the investment cycle is revived.

“Once we get the investment cycle going, once we get the investment engine started I think many of our problems can get resolved,” Chidambaram said after meeting chiefs of public sector banks.

“(Investor) sentiment is only one issue, the sentiment will change if the other issues are addressed,” he added.
The banks have listed a number of issues which are inhibiting investment, including fuel supply agreements, delay in clearances and approvals, land acquisitions and government entities not making payments in time.

“I intend to address these issues in consultation with the ministries concerned,” the minister said.
Chidambaram stressed that the government’s aim is to quicken investment. Industries, business houses which have business plan must bring forward their investment plans rather than deferring it, he said.

He also advised banks to focus on sectors which deserve credit. Penalty for rejecting edu loans to eligible students
Making sure that education loans are not denied to eligible students, Finance Minister P Chidambaram on Saturday said bank officers rejecting applications without sufficient reasons would be penalised. “No application should be turned down by the officer who is receiving it.

It can only be turned down by one level higher. They will now penalise branch managers who turn down, say, 5/10 deserving applications which are overturned by a superior officer,” Chidambaram told reporters here.

The Indian Bank Association (IBA) would come out with a new circular on education loans in the next few days, he said.
“Bank loan is the right of every student who meets the parameter. No bank can turn away an applicant.

Every application for a bank loan must be received and acknowledged and every deserving candidate must be given the loan if the student meets the parameter,” Chidambaram said.

Education loan is granted to Indian nationals for pursuing higher studies in India or abroad. As per its website, State Bank of India (SBI) gives loan up to Rs 10 lakh for studies in India, and Rs 30 lakh for education abroad. Such loans are usually extended to candidates pursuing professional courses from approved universities or from autonomous institutions like IITs and IIMs among others.

Chidambaram said the government has moved a Cabinet note for setting up of education loan credit guarantee fund, which make available loans for students. “The note will go to Cabinet in about a week or two and we hope to finalise the scheme and launch the fund before the end of the calendar year,” he added.