Banks Urged to Innovate and Mobilise Deposits Amid Savings Shift

Finance Minister Nirmala Sitharaman has urged banks to focus on their core activities of deposit mobilisation and lending. Speaking after her post-budget address to RBI's central board, she highlighted the need for banks to attract small savers and innovate. RBI Governor Shaktikanta Das echoed similar concerns about the credit-deposit gap.

Finance Minister Nirmala Sitharaman on Saturday encouraged banks to prioritise their core business activities, particularly deposit mobilisation and lending, amid increasing household savings shifting towards alternative investments.

Addressing the media after her customary post-Budget discussion with the central board of the Reserve Bank of India (RBI), Sitharaman pointed out the current mismatch between credit and deposit growth. She stressed that banks should be aggressive in attracting deposits, leveraging the liberty granted by the RBI to manage interest rates and devising innovative products.

Echoing this sentiment, RBI Governor Shaktikanta Das highlighted a substantial gap between deposit and credit growth, warning of potential structural liquidity issues. He underlined the urgency for banks to mobilise household financial savings effectively. Earlier, Sitharaman outlined the 2024-25 Union Budget's priorities, emphasizing the financial sector's role in achieving 'Viksit Bharat.'

(With inputs from agencies.)