GRE tunnel could not be used by the hosts connected to the router

Question

Hi,
I am using cisco ASR1013 (RP2) and a Mikrotik Router for setting up a GRE tunnel for LAN to LAN routing over a broadband link. The tunnel works fine (able to ping tunnel end points and also all the connected interfaces on both the Mikrotik and Cisco ASR) but the hosts that are connected directly to the Cisco router interface over a layer 2 cisco switch are unable to connect (ping) the hosts or connected interfaces on the mikrotik side. I am sure its not a mikrotik issue as i dont see any traffic coming through the tunnel using the mikrotik torch utility.  There are no ACL's or firewall rules on any of the devices...... 
Source and destination of the tunnel are public IP's and are pingable via internet (The tunnel is connected and endpoints are pingable)
Mikrotik connected interface IP = 192.168.253.1/24
Mikrotik tunnel end point IP = 192.168.254.1/30
Cisco tunnel end point IP = 192.168.254.2/30
Connected cisco subnet to reach Mikrotik = M.N.O.32/28
Cisco interface IP for LAN = M.N.O.33
Test host IP on the LAN subnet = M.N.O.34
The below is my Cisco config
ASR-1#sh run int tun 1
Building configuration...
Current configuration : 144 bytes
interface Tunnel1
 ip address 192.168.254.2 255.255.255.252
 ip mtu 1400
 tunnel source A.B.C.D
 tunnel destination W.X.Y.Z
end
ASR-1#sh run int g0/1/7
Building configuration...
Current configuration : 280 bytes
interface GigabitEthernet0/1/7
 description LAN
 ip address M.N.O.33 255.255.255.240
 ip verify unicast source reachable-via rx
 no negotiation auto
 cdp enable
end
ASR-1#sh ip ro 192.168.253.1
Routing entry for 192.168.253.0/24
  Known via "static", distance 1, metric 0 (connected)
  Routing Descriptor Blocks:
  * directly connected, via Tunnel1
      Route metric is 0, traffic share count is 1
ASR-1#ping 192.168.253.1 so M.N.O.33
Type escape sequence to abort.
Sending 5, 100-byte ICMP Echos to 192.168.253.1, timeout is 2 seconds:
Packet sent with a source address of M.N.O.33 
Success rate is 100 percent (5/5), round-trip min/avg/max = 5/5/6 ms
ASR-1#pi M.N.O.34
Type escape sequence to abort.
Sending 5, 100-byte ICMP Echos to M.N.O.34, timeout is 2 seconds:
Success rate is 100 percent (5/5), round-trip min/avg/max = 1/1/1 ms
If i try to ping 192.168.253.1 (network connected to Mikrotik) from the host M.N.O.34 (the gateway of this host is M.N.O.33 - Int g0/1/7 of the Cisco ASR), i cannot reach detination - request timed out.... Below are the results of trace and ping from the host connected to ASR G1/0/7
PING TO THE GATEWAY *********
[root@localhost ~]# ping M.N.O.33
PING M.N.O.33 (M.N.O.33) 56(84) bytes of data.
64 bytes from M.N.O.33: icmp_seq=1 ttl=255 time=0.161 ms
64 bytes from M.N.O.33: icmp_seq=2 ttl=255 time=0.143 ms
^C
--- M.N.O.33 ping statistics ---
2 packets transmitted, 2 received, 0% packet loss, time 1357ms
rtt min/avg/max/mdev = 0.143/0.152/0.161/0.009 ms
PING TO THE TUNNEL END POINT IN CISCO ASR
[root@localhost ~]# ping 192.168.254.2
PING 192.168.254.2 (192.168.254.2) 56(84) bytes of data.
64 bytes from 192.168.254.2: icmp_seq=1 ttl=255 time=0.141 ms
64 bytes from 192.168.254.2: icmp_seq=2 ttl=255 time=0.141 ms
^C
--- 192.168.254.2 ping statistics ---
2 packets transmitted, 2 received, 0% packet loss, time 1739ms
rtt min/avg/max/mdev = 0.141/0.141/0.141/0.000 ms
PING TO THE TUNNEL ENDPOINT IN MIKROTIK
[root@localhost ~]# ping 192.168.254.1
PING 192.168.254.1 (192.168.254.1) 56(84) bytes of data.
^C
--- 192.168.254.1 ping statistics ---
11 packets transmitted, 0 received, 100% packet loss, time 10413ms
PING TO THE CONNECTED INTERFACE ON MIKROTIK
[root@localhost ~]# ping 192.168.253.1
PING 192.168.253.1 (192.168.253.1) 56(84) bytes of data.
^C
--- 192.168.253.1 ping statistics ---
4 packets transmitted, 0 received, 100% packet loss, time 3641ms
TRACE TO THE CONNECTED INTERFACE ON MIKROTIK
[root@localhost ~]# traceroute 192.168.253.1
traceroute to 192.168.253.1 (192.168.253.1), 30 hops max, 60 byte packets
 1  M.N.O.33 (M.N.O.33)  0.180 ms  0.156 ms  0.145 ms
 2  * * *
 3  * * *
 4  * * *
 5  * * *
Please help

Answer 1

Hi,
Sorry for the delayed response ....Both ends static routes are added for the connected test interfaces.....
Regards,
Mahesh