More interest rate cuts are on the way and EMIs of home, auto and other loans are set to fall further as Finance Minister Arun Jaitley today asked banks to effect a corresponding cut of 75 basis points in line with the three rate cuts initiated by the Reserve Bank of India (RBI).At a review meeting with chiefs of public and private sector banks today, the Finance Minister said the banking system in response to the RBI’s rate cut of 75 basis points since January had carried out a rate cut of only 25 basis points. The banks have argued that balance sheet issues, cost of funds and higher rates of small savings schemes such as post office schemes compete with bank deposits and make rate transmission tougher. The government has agreed to look into the rates of small savings schemes. However, all banks unanimously said that greater transmission of lower rates could be seen within 2-3 months.“Some part of the rate cut has been passed on to customers, while some banks have not done so. I think some of the bankers feel they will be in a position to work out greater cuts over the next few weeks,” Jaitley said.During his discussion with CEOs of private banks, the Finance Minister shared his concern over their low participation in government-promoted schemes, especially the three social security schemes (Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana) where their participation is only 4 per cent. He said national priorities ought to be common to private banks as well since they benefitted from the same framework as public sector banks. To tackle non-performing assets (NPAs) in the public sector banks, Jaitley said the Finance Ministry would have a focused approach on projects stuck due to financial reasons.Jaitley said systematic steps to improve asset quality were expected from the banks and the RBI, government departments and financial institutions should collectively examine solutions to eliminate bottlenecks in critical projects of economic value.The Finance Minister said the Secretary of the Department of Financial Services should obtain a list of all major projects stalled due to financial reasons and then sort out issues with the banks concerned.Jayant Sinha, Minister of State for Finance, said banks should sell their non-core assets. Increasing NPAs, which are affecting the credit growth of banks, has been a matter of concern for banks and the government and were discussed in detail at the meeting. The increase in NPAs is due to some infrastructure projects, slowdown in recovery of the global economy and continuing uncertainty in the global markets, leading to lower growth rate of credit, because of which NPAs’ percentage of total credit has gone up. Stringent provisions further reduce both future credit flow and profitability of banks. The public sector banks continue to be under stress on account of their past lending.