Interest rates to remain attractive: FM

Finance Minister P Chidambaram said interest rates would remain attractive to depositors as well as borrowers, and the Reserve Bank would address the issue of shortage of lendable money in the system.

"These (hardening or softening of interest rates) are value judgements. All I can say is that interest rates would remain attractive to both depositors and borrowers," Chidambaram said.

Higher interest rates reflect increase in demand for credit in the economy, Chidambaram said adding, "no one in the government can say rising credit demand is bad or too much."

Pointing out that the demand for credit reflects the needs of different sectors of the economy, the Finance Minister said the issue that is to be addressed is the supply side of the credit.  "RBI is seized of the issue (of liqudity). I am totally confident that RBI will address the issue of supply side of the credit," he said.

Pointing out that the central bank has already taken the first step to tackle liquidity by allowing banks to raise NRI deposit rates by 25 basis points, he said RBI Governor Y V Reddy is a competent person to tackle the issue of credit shortage.