Finance Minister Nirmala Sitharaman has called on banks to develop innovative and attractive deposit schemes to address the slow growth in deposits compared to lending. Speaking after a Reserve Bank of India (RBI) board meeting, she emphasized the importance of deposits in maintaining the balance of the banking system. RBI Governor Shaktikanta Das also highlighted concerns over the increasing reliance on short-term deposits, urging banks to focus on mobilizing household savings through innovative products and better service offerings.
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- Finance Minister Nirmala Sitharaman urged banks to introduce innovative schemes to attract more deposits.
- She highlighted that deposits and lending are critical to the banking system, with deposits currently lagging.
- Sitharaman emphasized that banks should focus on their core business of mobilizing deposits and lending.
- There is a concern about the growing mismatch between deposits and lending, which banks need to address.
- Sitharaman suggested that banks develop “innovative and attractive” deposit schemes to mobilize funds from the public.
- RBI Governor Shaktikanta Das noted that banks often raise deposit rates to attract funds, as interest rates are deregulated.
- Das added that banks are free to set their own interest rates to attract deposits.
- During the recent bi-monthly monetary policy, Das expressed concern over the deposit-lending mismatch in the banking sector.
- Das warned that the reliance on short-term non-retail deposits could lead to structural liquidity issues in the banking system.
- He urged banks to focus on mobilizing household financial savings through innovative products and leveraging their extensive branch networks.
