New Delhi: Finance minister Nirmala Sitharaman told banks to use innovative methods for raising funds after a meeting with the RBI’s central board on Saturday. Sitharaman reiterated a point made by RBI governor Shaktikanta Das’ statement that banks must mobilise retail deposits and innovative methods to raise funds, instead of using alternative fundraising methods.
Sitharaman said the bankers’ work was to do the footwork and raise funds by mobilising small deposits. She said the grinding monotony was where the banks’ bread and butter lies. Banks’ CASA deposits have dwindled to 39 per cent this year so far from 43 per cent a year ago, according to the RBI governor, adding that there was a high flight risk with respect to high-value deposits.
Das reiterated that banks must monitor household leverage before extending loans. Macroprudential measures with respect to personal loans have yielded good results, but there was still some room for work on the banks’ part, he added.
RBI governor Das chimed in to add that the central bank had deregulated interest rates on ledning and bank deposits which empowers banks to fix the interest rates according to their needs. The finance minister urged banks to design innovative consumer products to raise funds. The focus of banks should be on core banking, the FM said adding that the finance ministry ad RBI were on the same page when it comes to this topic.
Banks continue to hike FD rates
Several public sector lenders, such as the Union Bank of India, PNB, Federal Bank and the Bank of India revised their FD rates in August 2024 with a focus on longer tenures. The RBI had also raised the limit for term deposits to Rs 3 crore from Rs 2 crore earlier, to bring more depositors into the FD fold.
Bangladesh crisis and Indian economy
Finance minister Sitharaman said calls form Tamil Nadu-based textile investments in Bangladesh had been fielded by her. The garment and knitted fabric sector saw some uncertainty. She hoped their investments were safe, she added.
Finance minister Nirmala Sitharaman reiterated the RBI’s stance that banks should focus on retail deposits to raise funds instead of using alternative fundraising mechanisms that may pose a risk to the financial system’s stability. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
