Banks should bring in innovative products to mobilise deposits: FM Nirmala Sitharaman
The banks, she stressed, need to focus on core banking business, which is mobilising deposits and lending to those who need funds.
Finance Minister Nirmala Sitharaman on Saturday asked banks to come up with innovative and attractive schemes to mobilise deposits.
Addressing the media after the Reserve Bank of India (RBI) board meeting, she said that 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.
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," Das added.
While unveiling the bi-monthly monetary policy earlier in the week, the RBI governor expressed concern for 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 the mobilisation of household financial savings through innovative products and service offerings and by leveraging fully on their vast branch network."
Edited by Suman Singh