New Delhi: Worried over the lethargic demand for fresh vehicles, the finance minister, P. Chidambaram asked the bankers to re-examine the rising interest rates. He told this during a top-level conference with the bankers and leaders of auto industry organised here.

Auto industry bosses including Maruti MD Jagdish Khattar, Tata Motors MD Ravi Kant and Hero Honda MD Pawan Munjal. Representatives from the banking sector included SBI chairman O P Bhatt, Bank of India CMD T S Naraya-naswami, ICICI Bank CEO & MD KV Kamath and Punjab National Bank CMD KC Chakrabarty attended the conference.

Mr. Khattar said, “The finance minister has asked bankers to re-look the interest rates in order to stimulate demand. Costs of the auto industry have increased and everybody understands there is a problem that has to be rectified.”

Stressing that the solution to the demand retardation was with the bankers, he stated that the auto industries had been taking steps on their own to alleviate the effect of high lending rates.

Auto major Tata Motors has already blamed that the cognizant interference by the administration for the interruption in the auto industry. Whereas bike sales have been reeling as an outcome of high interest rates, which have made the financing cost more pricey, car sales have still managed to lift up with the help of discounting schemes and a flood of fresh models.

The auto industry had reason to cheer with a few bankers at once toeing finance minister’s line on controlling interest rates, which have climbed up by as much as 3-3.5 percentage points since December 2006.

PNB’s Chakrabarty said, “We will try to find ways and means to see how their problems can be addressed.”

He added that Mr. Chidambaram had asked bankers to generate “constructive persuasions” to encourage demand, though he declined to describe by when interest rates would be slashed.

ICICI Bank’s Kamath stated that his banking institution would take a view on revising interest rates after the RBI’s monetary plan on October 30.

“There is a clear signal of a slowdown in retail loan growth, though the demand for credit from the corporate sector remains strong,” Mr, Kamath admitted.