Union Finance Minister Nirmala Sitharaman addressed the RBI’s Central Board of Directors with Union Minister of State for Finance Pankaj Chaudhary along with RBI Governor Shaktikanta Das at its customary post-Budget meeting in New Delhi, on Saturday.
RBI and the government are asking banks to focus on core banking activity of deposits and lending, says Finance Minister Nirmala Sitharaman.
The Reserve Bank of India (RBI) and the government are asking banks to focus on core banking activity of deposits and lending, Finance Minister Nirmala Sitharaman said on Thursday. She said this in a joint press conference with RBI Governor Shaktikanta Das after the 609th meeting of the RBI’s Central Board of Directors.
The finance minister said deposits and lending are the two wheels of a cart and “deposit is moving slowly.” The banks, she stressed, need to focus on core banking business which is mobilising deposits and lending to those who need funds.
In order to overcome the mismatch between deposits and lending, Sitharaman asked banks to come up with “innovative and attractive” deposit schemes to mobilise funds from the people.
RBI Governor Shaktikanta Das said that interest rates are deregulated and often banks raise deposit rates to attract funds.
“Banks are free to decide on interest rates”, Das added.
He said interest rates on deposits and lending are deregulated, and banks are free to decide rates as per their business.
RBI Governor Shaktikanta Das while unveiling the bi-monthly monetary policy earlier in the week, also had expressed concern of deposit-lending mismatch in the banking sector.
He had said that banks were taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand.
This, he warned, “may potentially expose the banking system to structural liquidity issues. Banks may, therefore, focus more on mobilisation of household financial savings through innovative products and service offerings and by leveraging fully on their vast branch network.”
Union Finance Minister Nirmala Sitharaman addressed the RBI’s Central Board of Directors with Union Minister of State for Finance Pankaj Chaudhary along with RBI Governor Shaktikanta Das at its customary post-Budget meeting in New Delhi, on Saturday.
