Sitharaman Urges Banks to Innovate Deposit Schemes to Bridge Lending Gap

Finance Minister Nirmala Sitharaman called on banks to create innovative and attractive deposit schemes to address the disparity between deposits and lending. Highlighting the slow pace of deposit growth, she emphasized the need for banks to focus on their core business of mobilizing deposits and providing loans.

Finance Minister Nirmala Sitharaman on Saturday urged banks to devise innovative and attractive deposit schemes to address the growing disparity between deposits and lending.

Following the Reserve Bank of India board meeting, Sitharaman emphasized that deposits and lending are essential components of the banking sector, but noted that 'deposit is moving slowly.' Banks, she reiterated, should focus on their core business of mobilizing deposits and lending to those in need.

RBI Governor Shaktikanta Das echoed this concern, noting the deregulation of interest rates and banks' frequent attempts to increase funds by raising deposit rates. He also warned that the current focus on short-term non-retail deposits could expose banks to structural liquidity issues.

(With inputs from agencies.)