Mumbai: Even though the headline credit demand is growing at a healthy 14 percent, Reserve Bank governor Shaktikanta Das Thursday said it is not broadbased while those to MSMEs have been muted so far.
Addressing the customary press conference after the monetary policy review, Das said credit growth to the critically important micro, small and medium enterprises sector remains “muted”. “Credit flows to micro and small as well as medium industries remained tepid, though it has improved for large industries,” resolution of the monetary policy committee read.
The Reserve Bank for the second consecutively time cut the benchmark rate 0.25 percent on expected lines and the MPC voted for the stance of the policy to be kept at “neutral”. Das said the RBI will continue to watch macroeconomic factors and will act timely on the same.
The central bank has also virtually deferred the shift of loans to an external benchmark, and he said consultation will be held to ensure an effective mechanism for transmission of rates. At the second policy review under Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.
The benchmark interest rate was cut by 0.25 per cent to 6 percent, a move that will result in lower cost of borrowing for the banks that are expected to transmit the same to individuals and corporates. The RBI had on February 7 had last cut interest rate to 6.25 percent from 6.5 percent.
