Finance Minister Expresses Concern over Slow Deposit Growth in Banks
New Delhi, August 12, 2024 – Finance Minister Nirmala Sitharaman attended the meeting of the Central Board of Directors of the Reserve Bank of India (RBI) on Saturday. This meeting took place following the passing of the Union Budget 2024-25 and the Finance Bill.
During the meeting, Sitharaman expressed concern over the slow pace of deposits in banks. She urged banks to develop innovative and attractive deposit schemes to incentivize customers to deposit more money. She emphasized that banks need to prioritize core banking activities and address the imbalance between deposits and loans.
The Finance Minister also acknowledged the increased retail investment in the stock market, suggesting that banks need to offer competitive alternatives to attract depositors.
RBI Governor Highlights Liquidity Concerns
RBI Governor Shaktikanta Das echoed Sitharaman’s concerns about the imbalance between deposits and lending in the banking sector. He expressed worry about the reliance on short-term, non-retail deposits and other financial instruments to fund loan growth. Das warned that this approach could lead to liquidity issues in the future.
MPC Maintains Repo Rate
The Monetary Policy Committee (MPC) of the RBI decided to keep the repo rate unchanged for the ninth consecutive meeting. Governor Das emphasized the focus on controlling inflation and maintaining price stability.
Additional Points:
The Finance Minister emphasized the need for banks to be innovative and competitive in their deposit offerings.
The RBI Governor highlighted the importance of mobilizing domestic financial savings through bank networks.