Banks across the country are currently struggling with the slow speed of deposits and are working on new ways to increase deposits. Meanwhile, Union Finance Minister Nirmala Sitharaman gave an important advice to the banks to increase deposits. The Finance Minister said on Saturday that banks should bring innovative and attractive schemes to raise deposits. After addressing the Board of Directors of the Reserve Bank of India, Finance Minister Nirmala Sitharaman said in a conversation with the media, “Deposits and loans are two wheels of the same vehicle, but the wheel of deposits is moving at a slow speed.”
The growing gap between deposits and loans is a matter of concern
The Union Finance Minister said that banks need to focus on core banking i.e. core business. This includes raising deposits and giving loans to those who need money. Nirmala Sitharaman asked banks to come up with innovative and attractive deposit schemes to raise money from people to bridge the gap between deposits and loans.
Banks are free to decide the interest rate
Reserve Bank of India Governor Shaktikanta Das said that interest rates are free of control and banks often increase deposit rates to attract funds. Shaktikanta Das said, “Banks are free to decide on interest rates.” Let us tell you that while presenting the monetary policy this week, the RBI Governor had expressed concern over the growing gap between deposits and loans in banks.
Banks can take advantage of their vast network
RBI Governor Shaktikanta Das had said that banks are increasingly resorting to short-term non-retail deposits and other liability instruments to meet the growing demand for loans. The governor cautioned that this could bring out structural liquidity issues in banks. Therefore, banks can focus more on mobilizing domestic financial savings through new products and service offerings and by taking advantage of their large network.
With PTI inputs
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