Besides making profit, the banks have a social responsibility to the people, he told reporters here after the weekly cabinet meeting.
Chandy said the cabinet discussed at length the issue of illegal moneylenders, who charge extremely high rates of interest.
The cabinet will "ask the banks to see that they make their lending process easier and simple. Of course, they have to ensure that their business is done properly and they should earn their profit", he said.
"But at the same time, the banks should not forget that they have an important social responsibility and do their business with a human touch," said Chandy.
"We have asked the state-level bankers' committee to call a meeting May 22 to discuss the issue."
Chandy said the cabinet also directed district collectors to call district-level bankers' committee meeting to see how they can help needy people by providing loans.
Besides, the cabinet asked the state's cooperative minister to see how best the banks in the cooperative sector can come forward to lend to the needy, he said.
Kerala Police have launched a drive against illegal moneylenders after five members of a family, victims of an illegal money-lending racket, committed suicide here on Saturday.
Police have arrested over two dozens of illegal moneylenders since then.