ICICI for level playing field to grow deposits

ICICI Bank Managing Director and CEO K V Kamath on Wednesday said there is need for level playing field for banks to compete with other institutions, such as mutual funds and insurance companies, for mobilising more deposits.

"A level playing field will enable banks to have their rightful share of deposits. And for this, a facilitating environment is needed," Kamath said, declining to specify whether the facilitating environment includes tax incentives.

On Monday, Finance Minister P Chidambaram had told the chairmen of 15 public sector banks that deposit growth needs to be in a range of 25 to 30 per cent to sustain a credit growth of around 30 per cent. Deposits are currently growing at around 20 per cent and credit at over 30 per cent for the third year in succession.

The Indian Banks' Association (IBA) is holding a meeting next week to follow up on Chidambaram's advice to discuss and come up with suggestions on how to make bank deposits more attractive.

The finance minister had said the deposits base of private sector banks was growing at a much faster pace than that of the public sector banks and had asked PSBs to "think about strategies to get more deposits and flat regulatory and non-regulatory issues that require policy changes".

K Unnikrishnan, senior vice-president, IBA, said "We will look at the issues concerning bankers. A lot of money is flowing into mutual funds and that doesn't augur well for banks. The 80(L) benefits available on bank deposits earlier have been withdrawn."

Kamath said he saw no market signals for a change in interest rates. "Liquidity is comfortable. I always read market signal and act on market signal. At present, there are no signals for movement in interest rates," said Kamath, after a press conference to announce the organisation of 'The Indus Entrepreneurs (TiE)' an entrepreneurial summit from December 17-19 in Mumbai.

While acknowledging that banks need to rebalance their portfolios on a continuous basis, Kamath said, "Rebalancing is going on all the time (at ICICI Bank). We started as a projects financier, rebalanced into consumer credit, then into rural lending, and we are growing our international assets now. We look at every sector and ensure it is within risk parameters."