Finance Minister Nirmala Sitharaman on Saturday urged banks to come up with innovative and attractive schemes to mobilise deposits. In a statement to the media following the Reserve Bank of India board meeting, she compared deposits and loans to the two wheels of a cart, stating that deposit is moving slowly.
FM emphasised that the banks should concentrate on their primary functions, which include deposit mobilisation and funding assistance to individuals in need. Sitharaman advised banks to devise innovative and attractive deposit schemes to attract public funds and address the discrepancy between deposits and lending.
Interest rates are deregulated, according to RBI Governor Shaktikanta Das, and banks frequently hike deposit rates to draw in money. “Banks are free to decide on interest rates,” Das added.
Earlier in the week, RBI Governor Shaktikanta Das voiced concerns over the gap between deposits and loans in the banking industry when announcing the bi-monthly monetary policy. He had stated that in order to accommodate the increased demand for credit, banks were turning more to short-term non-retail deposits and other instruments of liability.
This might expose the banking system to systemic liquidity difficulties, he cautioned. As a result, banks may concentrate more on mobilising household savings through creative product and service offers and by making full use of their extensive branch network.
(with inputs from PTI)
