Winning Bizness Desk

Mumbai. For the last several months, the gap between the credit and deposits of the banks was increasing. All the figures were being released indicating low deposits with the banks as much as the demand for loans. This shortfall was also because after increasing the repo rate of the RBI, banks did not increase the interest rates on deposits at the same speed at which the loans became costlier. In 2023, banks were forced to increase the interest rates on deposits. Banks are now offering interest rates on deposits from 8 to 8.50 percent, while small finance banks are offering interest rates on deposits from 9 to 9.50 percent. In view of this, in the month of November last year, in a meeting with the managing directors and CEOs of public sector banks as well as private banks, the RBI had expressed concern about the decline in deposit growth compared to the demand for loans. Banks also had to bear the brunt of this when there was a cash crunch. Banks started raising interest rates on deposits to meet the demand for loans. The effect of this decision of the bank has started showing and by increasing interest rates on deposits, banks have succeeded in attracting more than Rs 4 lakh crore deposits in just 15 days.

Investors were investing in mutual funds

In view of this, the RBI increased the repo rate from 4 per cent to 6.50 per cent in one year. But the banks were not increasing the interest rates on deposits. In such a situation, investors were investing in mutual funds for better returns. Even the small savings schemes of the government were getting better returns. The credit-deposit ratio had shot up to 69 per cent in the last several months. But the banks succeeded in increasing the deposits, after which this ratio has come down to 75 per cent. Deposits in banks have been Rs 184.5 lakh crore in the first fortnight of this year, which is 10.2 percent more than the same period last year. Credit has also been Rs 138.5 lakh crore with a growth of 15.7 percent during this period.

Banks were under pressure to raise deposit rates

The pressure on banks to increase deposit rates also increased because Finance Minister Nirmala Sitharaman announced a special deposit scheme for women in the budget. The Finance Minister announced a deposit scheme for women named Mahila Samman Savings Certificate. Under this scheme, only 7.5 percent annual interest will be given on deposits of two years' duration. The Finance Minister has doubled the investment limit in the deposit scheme for senior citizens from Rs 15 lakh to Rs 30 lakh, not only for women but also for senior citizens, which earns an interest of 8% per annum. After this announcement by the Finance Minister, the pressure on the banks to make their deposit schemes attractive increased.