Indian banks to offer cheaper loans to stimulate consumer demand

NEW DELHI (REUTERS) - Indian banks will get additional capital to provide loans at lower interest rates for purchases of two-wheelers and other consumer durables, the finance ministry said in a statement on Wednesday.

The move is aimed at stimulating demand in Asia's third-largest economy that is struggling to recover from the worst slowdown in a decade.

The decision was taken at meeting between Finance Minister P. Chidambaram and new central bank chief Raghuram Rajan, the statement added.

New Delhi has also decided in principle to inject 140 billion rupees (S$2.8 billion) in state-run banks in this fiscal year, it added.