Deposits in the banking system have fallen for the fortnight ended June 15, as lenders continued to shed high-cost deposit while savers preferred alternative class of assets due to unattractive real returns from such schemes.
According to latest data from the Reserve Bank of India, deposits fell by Rs 23,634 crore in the fortnight ended June 15, while loans registered a marginal growth of 0.05 per cent or Rs 2,466 crore during the period.
The growth in deposits and advances in the financial year has so far remained flat, RBI data shows.
Even as banks are typically offering 9-9.5 per cent for one-year deposits, the real return to saver are not attractive what with wholesale price-based inflation hovering around seven per cent and consumer price-based inflation at double digits.
On a year-on-year basis, credit growth was close to 18 per cent, while deposit growth was slightly above 14 per cent.
The growing gap between loans and deposits had been a cause of worry for the banking regulator, as this can cause asset liability mismatch gap in banks.
“Although money supply growth has been slightly under the projected trajectory, credit growth has moved above the projected rate,” RBI had said in the mid quarter review of the monetary policy last week. “Notably, the widening wedge between deposit growth and credit growth is intensifying liquidity pressures.”
The central bank has been purchasing bonds via open market operations to ease liquidity conditions.