Low deposit growth: Banks asked to use innovative products to raise funds
Mumbai: Concerned over household savings moving towards alternative investment avenues, RBI Governor Shaktikanta Das on Thursday asked banks to mobilise deposits through innovative products and services by leveraging their vast branch network.
“Banks are taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand. This, as I emphasised elsewhere, may potentially expose the banking system to structural liquidity issues,” he said.
Observing that alternative investment avenues are becoming more attractive to retail customers, he said, as a result banks are facing challenges on the funding front with deposits trailing loan growth.
Banks, he said, need to focus more on mobilisation of household financial savings through innovative products and service offerings and by leveraging fully their vast branch network.
Referring to the recent incidence of unprecedented IT outage globally, he said, the RBI has time and again emphasised the importance of robust business continuity plans to deal with such incidents.
The outage demonstrated how a minor technical change, if it goes haywire, can wreak havoc on a global scale, he said.
“It also showed the fast-growing dependence on big-techs and third-party technology solution providers. In this background, it is necessary that banks and financial institutions build appropriate risk management frameworks in their IT, cyber security and third-party outsourcing arrangements to maintain operational resilience,” he said.
Emphasing availability of accurate credit information is vital for both lenders and borrowers, Das said, it is proposed to increase the frequency of reporting of banks to credit information companies (CICs) to a fortnightly basis or at shorter intervals. At present, Das said, lenders are required to report credit information to CICs on a monthly basis or at such shorter intervals as may be agreed between the lenders and the credit bureau.
