RBI’s chief urges banks to monitor credit-deposit gap

Indian banks must closely monitor the gap between credit and deposit growth to prevent a potential liquidity problem, according to the Reserve Bank of India (RBI) governor.

In an interview with NDTV Profit, Shaktikanta Das stated that young Indians are aspirational and are drawn to various markets, which is a positive and natural trend.

“We are cautioning banks to monitor this situation carefully. There is no problem now, but it can become a structural liquidity problem in the future.”

Indian banks’ loans increased by 13.7 per cent year-on-year as of July 26, according to the latest RBI data. Deposits also grew by 10.6 per cent.

The strong economic growth and urban consumption have driven loan demand, but deposit growth has been slower. Governor Das emphasised the need for banks to attract more deposits by offering innovative products and services.

Attribution: Reuters

Subediting: Y.Yasser