Loans to corporates with stressed books not picking up, but lot of credit flow happening in MSME sector: Das

New Delhi, May 5 (KNN) Loans to corporates whose books are stressed are not picking up, but a lot of credit flow is happening in the MSME sector, individual housing and other loans, said Economic Affairs Secretary Shaktikanta Das.

Das said Indian banks should further cut interest rates for borrowers to pass on the benefit of cash windfall from demonetisation. He was speaking at the 50th annual meeting of the Asian Development Bank (ADB).

The Reserve Bank has slashed the policy rate by 150 basis points, or 1.5 percentage point, since January 2015, effectively reducing the cost of funds for banks.

"Impact of demonetisation was very very transient and has not spilled over to the current financial year... Post demonetisation, the rates have come down, there is scope for further transmission of rates. I would expect that to happen. We see signs of revival in credit cycle," he said, according to a media report.

Post cash ban, banks have reduced rates between 0.60-0.75 per cent, but on the ground, the effect of rate reduction is not visible.

"A lot of cash has come into the banking system. After December 30, in the past 3-4 months, banks have reduced their lending rates because there are low-cost deposits," he said.

Das said India will continue with its reforms and the goods and services tax (GST) will transform the way Indian economy functions.

Replying to the query whether India will stick to the July 1 GST rollout date, Das said "Absolutely".

"GST is going to make a total transformation in the way Indian economy is functioning. It would improve competitiveness and make Indian economy far more efficient," the secretary added.

GST will unify 10 different local taxes and make India one market for seamless transfer of goods and services.

Das made it clear that the government will simplify the FDI structure further and boost domestic manufacturing to maintain the growth trajectory.