Union Finance Minister Nirmala Sitharaman challenged banks to mobilise more deposits and disburse more loans for the various programmes that the government announced in Budget 2024-25.
After the post-Budget meeting with the RBI's Central Board of Directors, she was briefing media on how the banks had "distracted" themselves from their core business — deposits mobilisation and loan disbursement.
She said RBI has allowed freedom for banks to decide on their interest rates. Banks have been exhorted to innovate financial products for mobilizing deposit and, in the process, create a large pool of funds for lending. This would support higher economic growth and provide more job opportunities.
With more and more investors turning towards the stock markets, he said that banks have to see ways of attracting more deposits. She also urged them to focus on mobilising small, steady deposits from their vast branch network. Such deposits may be incremental, but are significant for stability in the banking system.
RBI Governor Shaktikanta Das said the share of low-cost current and savings accounts CASA deposits has come down from 43 per cent of total deposits in the previous year to 39 per cent now. He added that there is a greater need to focus on CASA deposits since bulk deposits are more volatile in handling costs effectively.
He also said that, compared with most economies, the interest rate environment in India is pretty stable. Coupled with this, he said that as part of the larger economic reforms, the RBI gave banks some room with regard to interest rates and increased regulation would prove counterproductive.
He also mentioned the issue of misrepresentation in media reports, which can lead to confusion in the minds of investors. She added that all sensitive financial reports, before being published, should be cross-checked with the Finance Ministry or the RBI, based on past experience when some wrong media reports were published regarding the enhancement of investment limits in foreign banks.
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