The governor stated that whereas loans in the end return to banks as deposits, the present regulatory concern stems from the truth that there might be structural modifications taking place which banks want to recognise and, accordingly, devise their methods.
“Households are increasingly allocating their savings to mutual funds, insurance funds and pension funds for deploying their savings instead of banks. On their part, banks have sought to fill the credit deposit gap by increasing their reliance on short-term borrowings and certificates of deposit. This increases their sensitivity to interest rate movements and poses challenges to liquidity management,” Das stated whereas talking at an occasion organised by the Financial Express.
His concern over deposit progress comes at a time when bank deposits have been rising at 10.6% as in opposition to a 14% progress in bank credit score throughout the first quarter of FY25.
Das stated the banking crises within the US and Europe have underscored the necessity for prudent liquidity administration and efficient dealing with of rate of interest dangers. RBI is reviewing the liquidity protection ratio framework to tackle rising issues, emphasising the need for banks to handle their rate of interest threat exposures diligently, Das stated. Additionally, the rise in digitalisation calls for sturdy cybersecurity measures.
Against the backdrop of rising cyber frauds, Das raised the problem of the speedy enhance in using mule bank accounts to perpetrate digital frauds. Mule accounts are opened by third events and utilized by fraudsters, both with or with out consent, to park and extract the proceeds of digital frauds. The governor stated these accounts expose banks not solely to critical monetary and operational dangers, but additionally to reputational dangers.
Das additionally stated that no person expects RBI to be a cheerleader for govt. He stated that variations of opinion between fiscal and financial authorities are inherent within the system.
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Bank of Baroda will increase deposit charges with a particular monsoon scheme, providing up to 7.25% for 399-day deposits. ICICI and Axis Bank have additionally raised their fastened deposit charges. Competition for deposits intensifies as banks anticipate an RBI charge minimize.
