Reserve Bank raises concern over falling deposit mobilisation

MUMBAI: Warning banks and non-banks in particular and all lenders in general again over the falling deposit mobilisation and increasing credit offtake, leading to asset liability mismatches, Governor Shaktikanta Das has said the Reserve Bank has is reviewing the liquidity coverage ratio framework to address the emerging issues.

“To meet the Basel III liquidity standards, deposit insurance and resolution tools, it’s imperative that our banks put in place prudent liquidity management measures proactively.” It has to be borne in mind that incorrect valuation of liquid assets can give a false sense of short-term liquidity resiliency, which is not desirable.

“Therefore, the Reserve Bank, on its part, is reviewing the liquidity coverage ratio (LCR) framework to address the emerging issues. This will be done after detailed public and stakeholder consultations,” Das told a function organised by a financial newspaper here on Friday.

It can be noted that deposits accretion by banks have been falling way behind lending since the pandemic, households having parking their savings in higher return assets like stocks and mutual funds, forcing banks to either offer higher prices for deposits or raise debt capital like long term infra bonds. In the past fortnight alone, almost all public sector banks have launched special fixed deposit schemes offering up to 7.3% interest rates for 366-666 days fixed deposits on one hand and on the other, they have mopped up over Rs 40,000 crore from infra bonds during this time.