Banks Urged to Innovate Deposit Mobilisation Strategies Amid Savings Shift

Finance Minister Nirmala Sitharaman called on banks to enhance their deposit mobilisation efforts by focusing on innovative products and leveraging their branch network. Amid concerns of a mismatch between credit and deposit growth, she emphasized the need for banks to target small savers and avoid reliance on short-term non-retail deposits to maintain liquidity.

Finance Minister Nirmala Sitharaman has called on banks to prioritize their core business and devise new methods to attract deposits, amid a shift in household savings towards alternative investment products.

Speaking at a post-Budget address to the Reserve Bank of India's (RBI) central board, Sitharaman stressed the need for aggressive deposit mobilisation to meet lending commitments. She highlighted the current mismatch between credit and deposit growth as a significant concern.

RBI Governor Shaktikanta Das echoed her sentiments, pointing to a 300-400 basis point gap between deposits and credit growth. He warned that this discrepancy could lead to structural liquidity issues. Both officials urged banks to leverage their extensive branch networks and introduce innovative products to attract deposits.

(With inputs from agencies.)