Jan-Dhan accounts: A new option for state-owned banks to mobilise deposits

Following this, many banks are exploring previously untapped areas to mobilise deposits while choosing not to engage in an interest rate war

State-owned banks are increasingly targeting JanDhan accounts to mobilise deposits as they face growing pressure to mop up deposits to manage credit growth amid an increasing shift of household savings towards higher-yielding financial instruments.

These accounts are primarily being used for distributing government schemes.

Both the Reserve Bank of India (RBI) and Finance Ministry have expressed concerns on numerous occasions over the sluggish pace of deposit growth compared to credit growth. This may lead to asset-liability management problems for banks. Additionally, they have instructed banks to employ innovative methods to accrue deposits. Following this, many banks are