Higher fixed deposit rate draws depositors

High deposit rates helped banks woo customers with the deposit growth inching above 17 per cent during the fortnight ended October 22.

Deposit mobilisation increased by Rs 86,945 crore in the fifteen days up to October 22 to a total outstanding of Rs 48,75,254 crore — an year-on-year growth of 17.12 per cent.

Reserve Bank of India had expressed concerns over low deposit mobilisation and had said that there was scope for increasing deposit rates to avoid asset-liability mismatch.

Following RBI ’s cues, most banks had hiked interest rates on short- and medium-term fixed deposits. In the last one month, banks have increased their deposit rates by as much as 100 basis points.

 

Deposit growth has not exceeded 15 per cent since the second half of April. RBI had projected 18 per cent growth in deposits. Bank executives said they will raise deposit rates when credit demand picks up.

Meanwhile, growth in bank credit grew by 21.2 per cent on a year-on-year basis in the 15 days ended October 22. According to RBI, bank credit grew by Rs 7,133 crore in the fortnight. Outstanding bank credit stood at Rs 34,76,132 crore, against Rs 34,68,999 crore in the previous fortnight.