Bank deposits are declining
Be it the country’s largest bank, SBI, or any small private sector bank, all banks in the country are facing a cash crunch today. The situation has reached such a point that banks no longer have enough money to lend. There is a continuous decline in deposits in banks; at its peak, the amount deposited in banks had reached Rs 2.86 lakh crore, but on August 28, it came down to just Rs 0.95 lakh crore. After all, what is the reason for this?
Union Bank of India recently released a report on the decline in bank deposits. One thing that has been particularly highlighted in the report is that there has been a continuous decline in deposits throughout the month of August. SBI’s new chairman CS Shetty also said at the Global Fintech Fest that the pressure on banks to increase deposits may continue for some time to come.
Government problems at RBI
The country’s Finance Minister Nirmala Sitharaman and Reserve Bank of India (RBI) Governor Shaktikanta Das have asked banks to take various measures to increase their deposits. Despite this, the liquidity (cash position) of banks is weakening. The fall in bank deposits has become a cause of concern for everyone, from the government to the RBI. This may affect the economic activities of the country.
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The Finance Minister has also asked the public sector banks to build better customer relations and provide good customer service. Apart from this, he also asked the banks to reach out to the customers, especially the customers in rural areas. In the review meeting of the banks, he specifically mentioned that credit growth is taking place, but the banks must also improve their care of the deposits that need to be paid, because only on this basis will credit growth be sustainable.
Why are bank deposits declining?
The problem of falling bank deposits is evident from a statement by the Finance Minister. He says that banks should focus on their main job. This does not mean that they do not focus on it, but their job is to accept people’s deposits and then distribute them in the form of loans very carefully.
He says there should be a balance between deposits and loans, only then this wheel will turn. It cannot be that deposits are less and the work of doling out loans is faster. Not only this, he has also asked the banks to adopt the best practices of the emerging sectors.
At the same time, it has also been said on behalf of the RBI that in earlier times, banks were the only investment option for the common man. But now there is a change in the behaviour of the customers and people are turning more towards the capital market i.e. the stock market. Apart from this, they have increased their investment in other financial assets. Therefore, the reason for the fall in bank deposits is the change in the behaviour of the customers.
Governor Shaktikanta Das says a large chunk of bank deposits are now going into mutual funds, pension funds and insurance funds.
