The Associate Chambers of Commerce and Industry of India (Assocham) said that the centre should ask banks to lower the lending rates by at least 2 percent so as to encourage corporates to borrow from them instead of considering other sources.

ASSOCHAM is the country's premier apex chamber. It represents the interests of industry and trade, provides an interface between the industry and government on policy issues and interacts with counterpart international organizations to promote bilateral economic issues.

The association said that businesses have started approaching other sources in order to access easy liquidity to bolster their diversification plans. They are considering sources like private equity, venture capital and mutual funds to aid them since commercial banks are not willing to lower the rates for them.

It said, "Despite the fact commercial banks are flushed with funds, credit offtake has not been happening as intended and therefore, there is a strong case to reduce lending rates by at least 2 per cent."

Commercial banks have funds worth Rs. 1,50,000 crore parked with the banking regulator, RBI, in the form of reverse repo rate.

Assocham President, Swati Piramal said that growth in deposit rates had increased by around 22 percent in October as against the credit pick up of 9 percent in the comparable period a year ago.