RBI Governor warns banks against growing gap between credit and deposit growth
Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das cautioned on Tuesday that Indian banks must closely monitor the widening gap between credit and deposit growth to prevent a potential structural liquidity issue.
"Young Indians are aspirational. They get attracted to different markets. There is nothing wrong in it, it's a natural process and a positive development," Shaktikanta Das told local television channel NDTV Profit in an interview.
"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."
As of July 26, Indian banks saw a 13.7% increase in loans compared to the previous year, while deposits grew by 10.6%, according to the latest provisional data from the RBI.
Strong economic growth and rising urban consumption have driven up loan demand, but deposit growth has not kept pace.
Governor Das emphasized the need for banks to attract more deposits through innovative products and services.
He noted that while credit growth and disbursements have accelerated due to technological advancements, deposit mobilization, which is still primarily conducted through physical channels, has been slower.
IBNS
Senior Staff Reporter at Northeast Herald, covering news from Tripura and Northeast India.
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