Finance Minister (FM) Nirmala Sitharaman’s August 19 meeting with heads of public sector banks (PSBs) will focus majorly on the various steps that lenders have taken to mobilise deposits, while also focusing on the cybersecurity measures adopted to prevent frauds, two senior officials told businessline.
“The FM will review the credit-deposit (CD) ratios of PSBs, along with measures taken to enhance deposit mobilisation. Discussions on cybersecurity measures to prevent frauds will also likely happen,” said an official.
According to CareEdge Ratings, while banks’ CD ratio has been generally hovering around 80 per cent since September 2023, it saw a decrease of 5 basis points (bps), compared to the previous fortnight, and stood at 79.3 per cent for the fortnight ending July 26, 2024. While a few large lenders are going slow on credit growth to match pace with deposits, a few mid to small size banks are hiking deposit rates to mobilise deposits.
Finance Minister Nirmala Sitharaman had recently urged banks to focus more on core banking business, which is mobilising deposits and lending to those who need funds. Calling deposits and credit as two wheels, she said that while one wheel (deposit) is slow, the second wheel (credit) is fast and this needs to be corrected
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.
During the meeting on Monday, the FM will also review PSBs’ asset quality trends, and see how are banks faring in engaging customers to adopt new government loan schemes like PM Vishwakarma scheme, PM SVANidhi Yojana, and PM Awas Yojana, among others, the officials said.
Sitharaman will also likely review how digitally mature regional rural banks’ (RRBs) digital infrastructure has become to handle the rising volumes of online transactions.