Finance Minister P Chidambaram today asked banks to keep EMIs at affordable level to boost sale of consumer durables that will restart the engine of manufacturing and revive the cycle of investment.

After a review meeting with the chiefs of public sector banks against the backdrop of slowdown in the economy, he also announced rescheduling of farm loans in drought-affected states and revision in procedures for easy sanction of education loans to students.

He said the meeting spent a lot of time to find out why business houses and industries which were sitting on piles of cash were not investing. Those who have investment plans must bring them forward rather than defer them by six months or a year.

Recalling his August 6 statement that reviving investment is the way out of the present challenges, Chidambaram said, “In fact, most of our problems will be addressed if we revive investment across the board — small, medium and large industries. Sentiment is only one factor. Sentiment will change if the other issues are addressed.”

Asserting that EMIs should be kept at affordable levels, Chidambaram said, “The middle class is complaining about increasing EMIs and stretching payment cycle. The middle class, which consumes consumer durables, is postponing purchases, and that is not good for the industry.”

“EMI must be kept at affordable level so that people will buy two-wheelers, cars, refrigerators, washing machines, cooking ranges, mixies and grinders.

“That will keep the engine of manufacturing going and large industries continue to produce these goods. The suppliers of parts and accessories in the small and medium enterprises will continue to do business.” he said.

Chidambaram cited the example given by the State Bank chairman that cars sales picked momentum after reduction of EMIs. SBI was selling 400 cars per day when the EMI was Rs 1,766 per lakh per month for seven years loan.