In the coming days, all the banks of the country can introduce new schemes. To focus on their core functions and increase deposits in banks, Finance Minister Nirmala Sitharaman has asked the banks to bring new and attractive schemes. She said that domestic savings are rapidly moving to other investment products, so there is a need to pay attention to this. Finance Minister Sitharaman said these things after addressing the meeting of the Board of Directors of the Reserve Bank of India. Let us tell you that there is a tradition of the Finance Minister addressing the meeting of the Board of Directors of RBI after the budget speech. Which was carried forward by the current Finance Minister on Saturday.
Banks can bring new schemes to increase deposits
The Finance Minister said that both the RBI and the government are asking banks to focus on their core business activities. They should focus on increasing deposits rapidly and then giving loans. These are the core business activities of banks. He said that there is a difference between increasing loans and deposits, so banks should focus on getting deposits.
The Finance Minister said that RBI has given freedom to banks to change the interest rates. Using this freedom, bank deposits should be made attractive. New products should be introduced and deposits should be raised. He also urged bank officials to focus on small savers instead of large or bulk deposits.
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RBI Governor Shaktikanta Das also said, “We are seeing a difference of about three to four percent between deposit and loan growth. Deposits are less in this.” He said, “Loans are now being given digitally, whereas this is not the case with deposits and this is an important change. That is why banks should focus on unique products to get deposits.” Das said, “The ratio of loans and deposits has increased. CASA (current account and savings account) deposits have come down to 39 percent of total deposits, which was 43 percent a year ago. On the other hand, loans have increased.” He also said that at present there is no problem. But there is a need to pay attention to this and if not given, there may be a problem of cash management.
Banks are free to change interest rates to raise money: RBI Governor
The RBI governor said banks should leverage their vast branch network to increase deposits through innovative methods and products. He also said interest rates are deregulated and banks often raise deposit rates to raise money. Asked if any policy intervention is needed to boost deposit growth, Das said, “Interest rate deregulation is in the country and if you go back to regulating deposits and lending, it can be regressive and distort the market.”
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While announcing the bi-monthly monetary policy this week, the RBI Governor had expressed concern over the gap between deposits and loans in the banking sector. He had said that banks are resorting more to short-term non-retail deposits and other means of liabilities to meet the increasing demand for loans. Das warned that this could lead to structural cash management problems in banks. That is why banks can focus more on mobilizing domestic financial savings through innovative products and service offerings and by taking advantage of their vast network.
Earlier, Sitharaman addressed the members of the Board of Directors on the occasion of the 609th meeting of the Central Board of Directors of the Reserve Bank here. She spoke about the vision of the Union Budget 2024-25, the emphasis on various sectors in it and the expectations from the financial sector. The Finance Minister also mentioned the priorities of ‘Developed India’. Sitharaman was accompanied by Minister of State for Finance Pankaj Chaudhary, Finance Secretary TV Somanathan, Department of Economic Affairs Secretary Ajay Seth and Department of Investment and Public Asset Management Secretary Tuhin Kant Pandey and other senior officials.
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The Central Board of Directors also reviewed the global and domestic economic situation, including challenges posed by global developments and financial market volatility. The meeting was attended by Deputy Governors Michael Debabrata Patra, M Rajeswara Rao, T Rabi Shankar, Swaminathan J and other directors of the Central Board – Satish K Marathe, S Gurumurthy, Revathi Iyer, Sachin Chaturvedi, Anand Gopal Mahindra and Pankaj Ramanbhai Patel.
