More Stories

Informist, Monday, Aug 19, 2024

 

NEW DELHI – Finance Minister Nirmala Sitharaman today urged public sector banks to carry out special drives to garner deposits. The nudge from the finance minister comes amid sluggish deposit growth that has led to a widening gap between credit and deposit growth and heightened concerns about banks’ liquidity management. 

 

"While the credit growth has picked up, mobilisation of deposits could further be improved to fund the credit growth sustainably and (Sitharaman) asked banks to make concerted efforts to garner deposits by conducting special drives," the finance ministry said in a release. Sitharaman was chairing a meeting to review the performance of public sector banks.

 

According to the latest Reserve Bank of India data, bank deposits grew 11.3% on year as of July 12 compared with 14.0% growth in credit.

 

At a joint press conference earlier this month, RBI Governor Shaktikanta Das and Sitharaman voiced concerns over slower deposit growth than credit disbursal. Sitharaman had also said that she would soon meet bankers and ask them to go back to collecting deposits the old-fashioned way. 

 

Lately, households have been channelising their savings into capital markets, instead of traditional instruments like bank deposits and small savings schemes. About 20% of Indian households are now channelling their savings into financial markets, according to the Economic Survey for 2023-24 (Apr-Mar).

 

The net financial household savings have declined due to the surge in retail investment in the capital markets, Sitharaman had said in Parliament. The registered investor base at the National Stock Exchange has nearly tripled to 9.2 mln as of Mar 31 from March 2020, as per the Economic Survey. 

 

At the review meeting today, Sitharaman also spoke about digital payments and cybersecurity framework, in addition to access to credit under financial inclusion. 

 

Sitharaman advised the banks that issues of cybersecurity should be seen from a systemic perspective and emphasised that a collaborative approach between banks, government, regulators and security agencies was needed to put in place necessary precautions against cyber-risks. 

Earlier this month, Financial Services Secretary Vivek Joshi said that the digital growth has raised some unique challenges, including governance issues, regulatory compliance issues, and consumer protection issues for the government and the sector at large.

 

The finance minister today said every aspect of the information technology system should be reviewed periodically and thoroughly from the cybersecurity angle to ensure that the security of the bank systems is not breached or compromised.

 

The meeting also discussed the Budget announcement on a credit assessment model for micro, small, and medium enterprises based on digital footprints and cashflows. 

 

The full Budget for 2024-25 announced that public sector banks will build in-house capability to assess MSMEs for credit, instead of relying on external assessment. State-owned banks will take the lead in developing a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy, which will be a significant improvement on the traditional assessment of credit eligibility based only on asset or turnover criteria, Sitharaman said, announcing the Budget in Parliament.

 

Sitharaman asked public sector banks to "expeditiously implement" this new model. 

 

"Banks were also instructed by the finance minister to focus on further increasing credit flow to eligible beneficiaries under various government initiatives like PM Surya Ghar Muft Bijli Yojana and PM Vishwakarma Yojana," the release said. 

 

Sitharaman also advised banks to ensure compliance with the RBI's guidelines on the handover of security documents after closure of the loans and directed that there should not be any delay in handing over the documents to the customer.

 

In September last year, the central bank said all regulated entities should release all the original movable or immovable property documents within a period of 30 days after full repayment or settlement of the loan account.  End

 

Reported by Priyasmita Dutta and Krity Ambey

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.