Date:23/05/2008 URL: http://www.thehindu.com/2008/05/23/stories/2008052355741500.htm

Business

State Bank withdrew circular at FM’s behest

Special Correspondent

NEW DELHI: A day after the State Bank of India (SBI) took a U-turn on halting loans for the purchase of tractors and other farm equipment, Finance Minister P. Chidambaram revealed that the circular was withdrawn by the country’s largest lender at his behest as it was “poorly worded” and not justified.

“That [SBI’s] circular was poorly worded and misunderstood. I asked my Secretary to advise the bank to withdraw it,” Mr. Chidambaram told newspersons during a Cabinet briefing here on Thursday. “I don’t think that the circular was justified,” he said while noting that loans given must be recovered but there was a proper method of doing it. The SBI circular issued on May 16 had instructed all its branches to stop entertaining tractor loan applications owing to the mounting repayment defaults in that loan segment.

On inflation, data for which is released on Friday each week, and the impact that surging crude oil prices at an all-time of $135 a barrel would have on the price spiral, Mr. Chidambaram made no pretences of being not anxious. “Thank God it’s not Friday,” he quipped and advised the people to “use public transport” instead of private vehicles.