RBI cautions depositors not to fall prey for high returns

New Delhi: Reserve Bank of India (RBI) Governor Shaktikanta Das on Sunday cautioned depositors to be careful, while chasing high returns as it comes with greater risk. Observing that depositors themselves also need to be very discerning, he said it is important to keep in mind that higher returns or higher interest rates are usually associated with higher risks.

"So, just because a bank is offering higher interest, the depositors themselves should be very careful before putting in money while chasing such high returns because usually, our experience is that high returns or high interest rates are associated with higher risks," he said.

However, he said there are institutions that are offering higher interest and are still viable, but depositors should always be very careful. Speaking at the 'Depositors First' event here, Das said the Reserve Bank remains committed to ensuring that the banking system remains robust and resilient, but it has to be a joint effort. "Every stakeholder whether it is the management of banks, whether it is the board of banks, whether it is the various committees of banks, the audit committee, the risk management committee, or any other regulatory authority that is associated, it has to be a joint responsibility for all of us," he said. Das stressed that the payment of the deposit insurance amount should be seen as a measure of last resort.

Our experience is that high returns or high interest rates are associated with higher risks - Shaktikanta Das, Governor