Bank deposits: Barking up the wrong tree?

Despite efforts to boost deposit growth, credit growth is outpacing deposits. Traditional strategies are not working. Are we missing the big picture?

What do Finance Minister Nirmala Sitharaman, Reserve Bank of India (RBI) Governor Shaktikanta Das, and Financial Services Secretary Vivek Joshi have in common? All three are concerned about the slow deposit growth in the banking sector. The industry is facing one of its toughest challenges in raising deposits to keep up with credit growth.

As of July 26, the deposit portfolio of all scheduled commercial banks stood at Rs 211.93 trillion, while credit reached Rs 168.14 trillion. So far this financial year, deposit growth has been 3.5 per cent, compared to a 2.3 per cent increase in credit.