Immediately after their meeting with the Finance Minister, heads of several banks-- including SBI, Bank of Baroda and UCO Bank-- promised to cut benchmark lending rates by up to 75 basis points. Punjab National Bank, which cut interest rates by 50 basis points last week, also expressed willingness to slash the rate further.

"We have had an extensive discussion and the IBA on behalf of the banks has assured me that they will reflect on the matter (interest rates) and come up with some decisions on the price at which credit will be delivered to different sectors," Chidambaram said after meeting with heads of PSU banks.

Even before the meeting, held a day after Prime Minister Manmohan Singh's interaction with the captains of industry who were demanding a cut in interest rates, leading banks, including SBI, had promised to review interest rates in the coming days.

Apart from PNB, other banks which have already announced a cut in interest rates by up to half a percentage point include Union Bank and IDBI Bank.

"I think the discussion on pricing of credit and delivery of credit will lead to some very encouraging decisions by the public sector banks," Chidambaram said while pointing out that the credit for housing and small and medium enterprises would also get desired attention.