Government and RBI Urge Banks to Focus on Small Deposits

Finance Minister Nirmala Sitharaman has asked banks to focus on collecting small deposits instead of just large ones to help with the slowing growth in deposits.

She pointed out that small deposits are crucial for regular lending, while large deposits alone are not enough.

RBI Governor Shaktikanta Das agreed, saying this advice is important to avoid potential money management problems.

He noted that while flexible deposit and loan rates are important, the growing gap between deposit and loan growth could cause issues if not addressed.

Sitharaman also mentioned that with more investment options available, like the stock market, banks need to be more creative in attracting deposits.

She plans to meet with bank leaders, including public sector bank heads on August 19, to discuss ways to improve deposit collection and focus on important lending areas.

Das also expressed concerns about how banks and non-banking finance companies (NBFCs) follow rules, especially about extra loans on secured assets.

He warned that the current gap between deposit and loan growth, which is 300-400 basis points, needs careful management to prevent future money management problems.