We expect banks to step up lending: Das

The Finance Ministry on Wednesday said it expected banks to accelerate lending to various sectors and also focus on individual loans such as housing, even as the Reserve Bank of India kept the policy interest rates unchanged in its bi-monthly monetary policy.

“We expect banks to step up lending to various sectors and also focus on individual loans such as housing,” Economic Affairs Secretary Shaktikanta Das told reporters here.

He said that the banks have already reduced rates after the demonetisation move was announced in a significant way.

RBI Governor Urjit Patel, however, demanded the banks to pass on the benefit of earlier cuts to consumers. He said the RBI has brought down policy rates by 175 basis points since January 2015 but the banks have passed on only up to 90 basis points.

“There is still scope for the lending rates to come down because our policy rates came down by 175 basis points and weighted average lending rates have come down only by 85-90 basis points. I think there is scope for more transmission,” Patel said in the post-policy interaaction with reporters.

The industry, however, demanded a rate cut. Ficci said, “A cut in the repo rate would have boded well for the economy.”