The RBI Governor said that the lag in deposit mobilisation compared to credit growth is a critical issue
Anjali Kumari Mumbai
Slow growth in deposits could expose the financial system to structural liquidity problems, he said at the Modern BFSI Summit 2024, organised by the Financial Express newspaper in Mumbai. Regulatory measures are emerging in response to these challenges.
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There is a clear trend of households increasingly shifting their investments to capital markets and other financial intermediaries. This trend has led to a decline in the share of bank deposits, Das said.
He described the lag in deposit mobilization compared to credit growth as a “critical problem” and urged banks to focus on sound lending.
The rising share of retail portfolios poses potential risks, Das said. The RBI has taken steps to mitigate these risks, focusing on the level of arrears and the caps on small unsecured loans, which remain a concern. Excessive interest rates on microloans have also been cited as another major problem, he said.
Das acknowledged the challenge that climate change poses to economic growth. The RBI is preparing plans to address climate-related risks and provide climate finance. He warned against the risk of greenwashing and stressed the need for vigilance in this area.
He ruled out the possibility of allowing large companies to access banking, saying this was not currently being considered. He stressed the need for solid, healthy and well-managed banks that can meet credit requirements through technological innovations.
The financial system is healthy, but there are challenges that the RBI wants to address and ensure their stability, he said.
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