In a recent address following a post-Budget meeting with the Reserve Bank of India’s Central Board of Directors, Finance Minister Nirmala Sitharaman called on banks to intensify their efforts in raising public deposits and enhancing lending for government initiatives outlined in Budget 2024-25.
Minister Sitharaman emphasized the necessity for banks to prioritize their fundamental roles of deposit collection and lending.
She stressed that with the Reserve Bank of India (RBI) allowing banks greater flexibility in setting interest rates, it is imperative for banks to devise innovative deposit schemes to bolster available funds.
This move aims to stimulate economic growth and generate employment opportunities.
Sitharaman noted a growing trend of investors turning to stock markets, yet highlighted the crucial need for banks to create attractive schemes to draw in deposits.
She advocated for banks to focus not just on large deposits but also on accumulating smaller deposits, which, although modest, are integral to the stability and functionality of the banking sector.
RBI Governor Shaktikanta Das Highlights Decline In CASA Deposits; Stresses Focus On Stability In Banking Sector
RBI Governor Shaktikanta Das also addressed the issue, revealing a decline in low-cost current and savings accounts (CASA) from 43 percent of total deposits last year to 39 percent this year.
He underscored the importance of concentrating on CASA deposits to reduce costs, rather than relying solely on large deposits, which can be highly volatile.
Governor Das reassured that India’s banking sector remains stable with a consistent interest rate regime, unlike the more volatile systems observed in other countries.
He highlighted the RBI’s provision of leeway for banks to offer higher deposit interest rates as part of ongoing economic reforms, cautioning against any regulatory measures that could hinder progress.
Additionally, Sitharaman addressed the issue of misleading media reports, stressing the importance of verifying information with the Finance Ministry or the RBI before publishing sensitive financial news.
She specifically refuted unverified claims about the government increasing investment limits in foreign banks, which she asserted were baseless.
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