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Business News/ Industry / Banking/  RBI’s Das, heads of banks review deposit growth
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RBI’s Das, heads of banks review deposit growth

The governor acknowledged the crucial role played by commercial banks in supporting economic growth since the outbreak of the pandemic and the ongoing financial market turmoil

Reserve Bank of India governor Shaktikanta Das. MintPremium
Reserve Bank of India governor Shaktikanta Das. Mint

 

Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday met the heads of public and private sector banks and discussed the issue of deposit growth trailing credit growth, among other matters.

“Among other matters, issues relating to lagging growth in deposits vis-à-vis credit growth, asset quality, investments in IT infrastructure, adoption of new-age technology solutions, functioning of Digital Banking Units, were also discussed," the central bank said in a statement.

Demand for credit has surged ahead of the growth in deposits, prompting banks to introduce fresh offers to attract depositors.

Mint had earlier reported that bank deposit rates—now on the rise after several months of stagnation and minor increases as part of asset liability management—have been yielding negative returns when adjusted for inflation.

For the fortnight ended 21 October, non-food credit rose 18.3% from a year ago, against a deposit growth of around 9.5%.

Given that inflation has been above the RBI’s target of 2-6% for 10 months between January and October, savers are at the receiving end of the covid-era liquidity slush.

Some experts believe that the decision to keep interest rates low to aid economic growth has affected bank depositors.

The governor’s meeting with bankers was also attended by deputy governor M.K. Jain along with senior officials of the RBI.

According to the statement, the governor, in his introductory remarks, acknowledged the crucial role played by commercial banks in supporting economic growth since the outbreak of the pandemic and the ongoing financial market turmoil.

“He further stated that despite challenges, the Indian banking sector has remained resilient and continued to improve in various performance parameters," according to the statement.

 

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Published: 17 Nov 2022, 12:46 AM IST
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