Finance Minister P. Chidambaram on Wednesday  advised banks to reduce base rates to provide a powerful stimulus to credit growth for the economy.

Briefing newsmen after meeting heads of Public sector banks and financial institutions in New Delhi today, he asked the banks to pass on benefit of RBI rate cuts to borrowers.

While the the RBI has reduced the policy rates by 1.25 per cent since January 2012, to prop up growth, banks have lowered the lending rates by only 0.30 per cent during the period.

Mr. Chidambaram also asked the banks to gear up to meet the credit demand of the economy before the busy season beginning in October. Chidambaram said the banks have assured him to review the base rates.

He also said, the banks should become the strongest pillar in direct benefit transfer of government benefits to the people. He said the focus of todays meeting was on deposit growth and credit growth. The finance minister observed that the deposit growth have been modest.

Concerned over rising bad loans,Finance Minister P Chidambaram today advised the banks to focus on top defaulters and take action against them. He said, the banks should ensure that the recovery of Non Performing assests must be higher than loans written off in the books. Chidambaram said it is the 30 top non-performing accounts which account for bulk of the NPAs.

Non-performing assets of banks have been on the rise for past several months due to slowdown in the economy.

Mr.Chidambaram further said the banks would open over 8,000 new branches this year and hire over 50,000 people.

At the meeting with the bank chiefs,the finance minister reviewed the credit to agriculture, MSME sector, housing, education, minority communities and also financial inclusion.