RBI Advises Banks On Managing Credit-Deposit Discrepancy To Ensure Liquidity Stability

"We are cautioning banks to monitor this situation carefully. There is no problem now, but it can become a structural liquidity problem in the future,” Das added

Governor Das highlighted the need for banks to attract more deposits by offering innovative products and services

Source : PTI

The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, highlighted the importance of Indian banks closely monitoring the gap between credit and deposit growth to prevent potential structural liquidity issues. 

"Young Indians are aspirational. They get attracted to different markets. There is nothing wrong with it; it's a natural process and a positive development,” Das remarked in an interview with NDTV Profit on Tuesday.

"We are cautioning banks to monitor this situation carefully. There is no problem now, but it can become a structural liquidity problem in the future,” he added.

As of July 26, Indian banks saw a 13.7 per cent increase in loans compared to the previous year, while deposits grew by 10.6 per cent, according to the latest provisional data from the RBI. The surge in loan demand has been driven by strong economic growth and increasing urban consumption, but deposit growth has yet to keep pace.

Governor Das highlighted the need for banks to attract more deposits by offering innovative products and services. He pointed out that while advances in technology have accelerated credit growth and disbursement, deposit mobilisation remains sluggish, primarily because it still relies mainly on traditional physical channels.

He also talked about monetary policy decisions and said a single instance of 4 per cent inflation will not influence policy decisions. He emphasised the importance of patience and underscored the need for ongoing efforts to manage inflation, aiming for a consistent alignment with the 4 per cent target.

“We will not alter our policy based on a single 4 per cent reading; we must ensure inflation stays around 4 per cent sustainably. We want inflation to decline to 4 per cent and stay there. India's growth remains intact, stable, and resilient, with only minimal sacrifice so far, making it the fastest-growing economy in fiscal 2024-25,” Das said.