Lower interest rate funds from local banks will boost lending for businesses in India, following the demonetisation which has bloated deposits, a senior business consultancy executive said here today.
"The good news for businesses is that interest rates are being cut across the board led by Reserve Bank of India," said Japnit Singh, Deputy Chief Executive at the Singapore- headquartered Spire Research and Consultancy.
"We should see that (lower interest rate)trend continue and availability of funds from the banks is actually going to be a lot better. Demonetisation scheme has bloated deposits in the banks," he said after addressing a breakfast meeting for investors.
"Very soon the banks are going to be very eager to lend these money which will see interest rates dropping," he added.
Demonetisation, he said, is going to be a positive development as a part of the basic foundation being built for Foreign Direct Investors (FDIs), he pointed out.
"There has been a lot of concern from FDIs about transparencies, corruption, (and) ambiguity in doing businesses. A lot of these concerns are going to be addressed now," said Singh, pointing to other investment related laws being implemented, including the Goods Services Tax, though the implementation of which has been delayed to July.
Undeniable, there will be short-term pains following the demonetisation, introduced on November 8, 2016. But the degree of transparency and ease of doing business is really going to be good, he said.
"India is relatively well positioned in cost of doing business," he said adding that the processes will be seeing an increase in the efficiency of doing business.
"We should see a lot less wastage, a lot less leakage of funds for the foreign investors, (and) that would really have a positive impact on confidence," he said.
"With demonetisation, the big area that have been addressed is the degree of risk, which will be lower from now in the real estate, manufacturing and ICT sectors among others, he added.
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