look news india
After about 30 months, the banking sector has suffered a major setback as the number of bank deposits has become more than the total loans. The increase in bank deposits is attributed to the Reserve Bank of India's (RBI) stimulus measures for banks.
According to the latest RBI data, deposits in banks increased by 11.74 per cent year-on-year to Rs 218.07 lakh crore during the fortnight ended October 18. Whereas during the same period, credit growth has increased annually by 11.52 percent to Rs 172.38 lakh crore. Banks were encouraged by the RBI to come up with innovative strategies to reduce the gap between bank deposits and credit growth as well as raise more funds. Of course, experts believe that the main reason for the narrowing gap between credit expansion and deposit growth could be that credit growth has slowed down from its earlier highs. Following the regulator's instructions, there has been a rush to collect deposits by banks and that too especially private sector banks. Deposit growth of 11.74 per cent in the fortnight ended October 18 is lower than 11.80 per cent growth in the fortnight ended October 4. Similarly, the pace of credit growth also remained slow during the fortnight of October 18. Which decreased by 12.77 percent from the previous period. Credit growth has outpaced deposit growth since the fortnight ending March 25, 2022. In this way this difference reached 700 basis points. According to the RBI report, there was a difference between credit and deposit growth for two-four years. An economic expert said, this situation is as expected.