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Informist, Wednesday, Nov. 6, 2024

 

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--RBI Das: Considerable improvement in bks' CD ratio compared to few mos ago 
--RBI Das: Banks should understand CD ratios should not be completely skewed 
--RBI Das: Underwriting standards must be more robust 
--RBI Das: Underwriting standards in Indian banks have considerably improved 
--RBI Das: Dont have a view on credit growth, depends on individual banks
 

 

MUMBAI – Banks need to understand that credit-deposit ratios cannot be completely skewed, Reserve Bank of India Governor Shaktikanta Das said at the Business Standard BFSI Summit. "We have not hard coded that this should be the CD ratio for banks, but this is something that every banker understands...CD ratio cannot be completely skewed," Das said. 

 

Das's comments come against the backdrop of both the Reserve Bank of India and the finance ministry raising concern about growth in banks' deposits lagging advances. Although the latest data shows a slight improvement, the gap between deposit and credit growth is still high. Bank deposits grew 11.7% on year as of Oct. 18, compared with 11.8% as of Oct. 4. On other hand, bank loans grew 11.5% on year as of Oct. 18, compared with 12.4% as on Oct. 4.

 

However, the credit-deposit ratio of banks has improved considerably, compared to a few months ago, Das said. 

 

Commenting on the fast pace of credit growth in the Indian banking sector, Das said, the Reserve Bank does not hold any view on what the ideal credit growth rate should be for banks and it's upon each individual bank to decide the rates.

 

Das also commented on the underwriting standards of Indian banks. "The underwriting standards of banks has considerably improved," Das said, citing the improvement in banks' asset quality over the past 10 years. Despite the improvement in asset quality, there is a need for more robust underwriting standards, Das said.   
 

The governor also cautioned banks and non-bank finance companies against diluting underwriting standards to push credit growth.  End

 

Reported by Kabir Sharma

Edited by Akul Nishant Akhoury

 

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