State Bank of India (SBI)‘s Managing Director (MD) Ashwini Kumar Tewari, on Wednesday, said the deposits of banks may rise at a faster pace if there is a correction in equity markets. The benchmark Nifty 50 index scaled to an all time high of 25,129.60 in intra-day trading today.

“As the market corrects over some time, some of the money which was earlier with us, will come back. It will be a mix of things,” he said on the sidelines of the Global Fintech Festival being held here in Mumbai.

Apart from raising deposit rates, SBI is focusing on garnering small value, small ticket accounts to raise deposits. The government’s Jan Dhan scheme, Tewari said, is also being focused on to gain deposits.

Banks’ credit growth has grown been faster than deposit growth for a long period. In order to fill the gap, lenders are raising infrastructure bonds, additional tier-I (AT-1) bonds and raising deposit rates at the same time.

However, if the credit growth continues outpacing deposits for longer period, it will create certain imbalances, which the Reserve Bank of India (RBI) is vigilant about.

“That is what the regulator is pointing out. That if there are imbalances, it is not good for industry. Some banks are also going for bulk deposits, but bulk deposit is inherently unstable,” he said. “It is only a function of interest rate and it could go away very quickly. So therefore retail deposit, which is far more stable, is the way to go. That is what the regulator is telling us,” he added.

The RBI hiking risk weights on unsecured credit and its new draft guidelines on project finance also point out that the regulator does not want lenders to grow such advances at a rapid pace.

SBI’s overall advances rose 15 per cent year-on-year (YoY) to ₹38.12 lakh crore in Q1FY25, whereas total deposits were up 8 per cent YoY at ₹49.01 lakh crore.

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