Higher FD rates yet to draw depositors

Bank deposits in the 15 days to August 13 declined even as several lenders began raising their deposit rates soon after the Reserve Bank of India announced an increase in its key rates on July 27.

Data from RBI show that deposit mobilisation fell Rs 8,016 crore in the fortnight to August 13 to a total outstanding of Rs 46,39,595 crore, translating into a year-on-year growth of 14.1 per cent.

Following RBI’s cues from the monetary policy review, most banks had raised interest rates on short- and medium-term fixed deposits by as much as 1.5 per cent.

RBI had expressed concerns over low deposit growth in its policy meeting with bankers and had asked them to beef up deposit mobilisation to avoid any asset-liability mismatch.

Meanwhile, growth in bank credit inched above the 20 per cent mark in the 15 days ended August 13 after a temporary fall last fortnight.

According to the data from RBI, bank credit grew by 20.13 per cent on year-on-year basis at the end of the fortnight. Outstanding bank credit stood at Rs 33,57,265.34, as against Rs 28,05,224.26 crore at the end of the previous fortnight.

Credit growth had spiked in the first quarter of the financial year on demand from telecom firms for the 3G and Broadband Wireless Access spectrum auctions. Bankers expect credit growth to moderate over the current quarter. The central bank has projected 20 per cent growth in credit for the current financial year. A number of banks have also increased their benchmark prime lending rates in a bid to coax more customers to move to the base rate system, which came into effect from July 1. So far, base rates have been untouched.