2024-08-10 16:23:55
New Delhi: According to a recent research report by SBI, Indian banks are experiencing increasing loan growth, but deposit growth is not keeping pace. People are increasingly opting for mutual funds and equities instead of depositing money in banks. In recent months alone, over Rs 21,000 crore has been invested in mutual funds alone.
RBI Governor Shaktikanta Das has expressed concern over this trend, stating that the shift of retail money towards alternative investment routes could create structural problems for the banking system. He highlighted that banks are facing challenges in securing funding due to the lagging deposit growth compared to credit demand. This necessitates banks to rely more on short-term, non-retail deposits and other liability sources.
Bank Deposits
The research report also reveals a decline in bank deposits compared to the increasing credit growth. This trend is driving people towards alternative investment options like mutual funds and shares. Notably, over Rs 21,000 crore has been invested in mutual funds in recent months. Das further emphasized the preference for capital markets over traditional banks for savings investment. While bank deposits remain the highest in terms of percentage, their share is diminishing as people explore other avenues for their financial assets.