'Deposits moving slowly': FM Sitharaman says banks should bring innovative schemes

Underlining the slow growth in bank deposits, Finance Minister Nirmala Sitharaman on Saturday, August 10, said lenders should come up with innovative schemes to mobilise deposits.

Sitharaman, along with other finance ministry officials, met Reserve Bank of India (RBI) Governor Shaktikanta Das in New Delhi for post-Union Budget consultations.

Addressing the media following the meeting, Sitharaman said deposits and lending are the two wheels of a cart and "deposit is moving slowly."

The banks, she stressed, need to focus on core banking business which is mobilising deposits and lending to those who need funds.

In order to overcome the mismatch between deposits and lending, Sitharaman asked banks to come up with "innovative and attractive" deposit schemes to mobilise funds from the people, news agency PTI reported.

'Banks free to decide'

RBI Governor Shaktikanta Das said that interest rates are deregulated and often banks raise deposit rates to attract funds. "Banks are free to decide on interest rates", he added.

The RBI Governor, while unveiling the bi-monthly monetary policy earlier in the week, also had expressed concern of deposit-lending mismatch in the banking sector.

He had said that banks were taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand.

This, he warned, "may potentially expose the banking system to structural liquidity issues. Banks may, therefore, focus more on mobilisation of household financial savings through innovative products and service offerings and by leveraging fully on their vast branch network."