The government's purpose for the meeting that was held between Union Finance Secretary, Mr Arun Ramanathan and representatives of private, foreign banks has been fulfilled. The private lenders have assured the government on considering a cut in their interest rates. "Private bankers said that liquidity is better now but it continues to be an item which has to be monitored on a regular basis," stated Mr Ramanathan.

Senior officials from ICICI Bank, HDFC Bank, Jammu and Kashmir Bank, Axis Bank, HSBC, Citigroup and Duetsche Bank had attended the proposed meeting with the Finance Secretary on November 5th.

ICICI Bank is reviewing the changes that are taking place in the economy on daily basis, said Ms Chanda Kochhar, Joint MD of ICICI Bank. "However, there was a consensus at the meeting that it is in the interest of the economy to have lower interest rates. But we will have to see how situation moves before we take a decision," she added.

Earlier the public sector chiefs had met the Finance Minister Mr. P Chidambaram on November 4th and agreed on to cut interest rates. They confirmed that they would decrease the lending rates between 50 and 75 basis points.

In fact most of the PSU banks have cut down their PLR immediately after the meeting. They are revising down the interest rates of their loan portfolio and there is an expectation that private lenders will follow the suit.

PSU banks have decided to reduce their deposit rates from next month, said Mr George Joseph, CMD, Syndicate Bank. "Most banks are bringing it down with effect from December 1,"added Mr Joseph.