DFS-PSBs meet: Deposit growth, priority lending in focus

The themes for the two-day strategy meet in New Delhi, beginning Monday, have been selected with a focus on inclusive economic development and ensuring a wider and more equitable distribution of credit across the country.

“It is a strategy meet where all operational issues will be highlighted and the ministry will give its feedback,” said the chief of a public sector bank.

The event will be held under the aegis of the Department of Financial Services (DFS), bringing together top leadership from public sector banks (PSBs) and financial institutions such as SIDBI, NABARD and Exim Bank. Discussions will focus on how financial institutions and banks can collaborate to strengthen agricultural infrastructure, improve resource mobilisation and implement targeted programmes for the youth.

Other topics for discussion include strengthening rural infrastructure for agriculture and horticulture, developing specialised banking products for the youth, expanding priority sector lending to underserved segments, growing the credit card business and supporting global capability centres.

“Deposit growth is an issue for most of the banks, especially for the smaller ones. A lot of deliberations will be on how to bridge this gap and what additional steps these banks can take to mop up deposits. The FCNR(B) has given a relief now, but structural changes are required which are also likely to be deliberated,” said a senior banker who will be part of the deliberations.

Banks have been relying on retail term deposits and wholesale deposits from companies to augment their resource base and fund credit growth. With household savings increasingly moving towards equity markets, the banking sector is facing a resource crunch. While larger banks, with extensive branch networks, have been able to mobilise current account, savings account (CASA) and term deposits, smaller players have struggled to expand their deposit base.