"There is a general consensus among the bankers that while Public Sector Units (PSUs) and joint sector companies can be permitted to make premature paymets of existing loans and avail fresh loans at lower rates, this can oly be done on a case to case basis," State Level Bankers Committee Chairman, Ramesh Misra said adding that it was not possible to implement this on a uniform basis since some banks were chary of lowering interest rates for certain high risk industries such as chemicals etc.

Misra maintained that the state government's proposal for lowering prime lending rates (PLRs) was pragmatic since "It is a good idea to make state-owned corporates more profitable by way of reducingcosts since this will make the units viable and is therefore in the interest of all concerned." He categorically stated that the PSUs and joint sector companies could approach the financial institutions and banks which were willing to consider fresh loans at lower interest rates.

Many private sector banks have approached the Gujarat government recently and have shown willingness to provide finance at competitive terms (PLR plus one to two per cent) to organisations like the Gujarat Mineral Development Corporation, Gujarat Narmada Fertiliser Corporation and Gujarat State Finance Corporation. Some banks have even volunteered to provide bridge loans "So that the exercise of obtaining low cost long term debt can be undertaken expeditiously."

State government sources welcomed the banks' decision to review the interest rates in view of falling long-term PLRs as a "welcome step which is expected to shore up the bottomlines of state sector undertakings."