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Indian Investment in the Bank: The banking sector of the country is facing an unprecedented situation in the last few months, and that is the slower rate of growth in deposits compared to loans. In simple words, the 'lending' of banks is falling short of 'deposits'. Let us look a little deeper into this topic.
Worrying figures of RBI
According to the latest data from the Reserve Bank of India (RBI), the deposit rate in banks across the country stood at 11.7 percent and the credit rate increased by 15 percent in the quarter ended June 2024. That is, the rate of deposits deposited by Indians in banks (on which the customer gets interest from the bank) is 11.7 percent and the rate of credit (loan etc., for which the customer pays interest to the bank) given by the bank to the customers has been made 15 percent.
RBI and government worried
The growing gap between the two has worried the RBI and the government, as only customer deposits are used to run the country. He asked banks to focus on deposit mobilisation through innovative schemes. Banks in India have never faced a situation like this before. Let us examine the reasons why this happened.
This is the main reason
Earlier in India, the math was that if you want to save, then deposit money in the bank, make a fixed deposit or put it in a savings account. The situation has changed in the last few years. With the opening of many options from mutual funds to the stock market, the flow of people's savings has increased towards it. Instead of investing in the traditional savings scheme of the older generation 'Fixed Deposit', the new generation has started investing in 'Mutual Funds'. Apart from this, the older generation is also allocating more money in 'Insurance Funds' and 'Pension Funds'. This has had a direct impact on the deposits received by the bank.
This has changed the mindset of investors
After the Covid-19 pandemic, the trend of Indian people has increased towards direct (direct trading) and indirect (using the mutual fund route) capital markets. The reasons are as follows.
1. Higher Returns – Capital markets offer higher returns than investing in banks.
2. Easy investment process – The investment process has now become easier than before. The customer can also invest in various mediums on his own.
3. Benefits of digital infrastructure – Everything is now done at hand thanks to smart phones. This includes access to capital markets. The hassle of paperwork has been eliminated due to digital infrastructure. The customer can open the mobile and see his investment data and transfer money from one medium to another whenever he wants.
4. Small investments allowed – Realising that the capital markets do not require large sums of money, Indians are entering the sector even with small amounts of money.
5. Risk Awareness – Earlier there was a perception that ‘money is lost when stocks fall’, but in the last few years, there are low-risk options available in the capital market. [जैसे सिस्टमैटिक इन्वेस्टमेंट प्लान (एसआईपी) और डेट फंड’ के बारे में जागरूकता आई है। ]. But Indians are investing in this direction.
Encouraging data from capital markets
In the last two-three years, more and more Indians are shifting their savings from banks to the capital market. According to the Economic Survey 2023-24, the number of demat accounts in 'National Securities Depository Limited' (NSDL) and 'Central Depository Services Limited' (CDSL) is expected to increase from 11.45 crores in 2023 to 15.14 crores in 2024.
Mutual funds boom
Talking about mutual funds alone, this sector has registered a rapid growth of 6.23 percent. By July 31, 2024, it has increased to a record high of Rs 64.97 lakh crore. The mutual fund segment currently has about 9.33 crore Systematic Investment Plan (SIP) accounts through which investors invest regularly.
What can the banks do now?
RBI and the government have directed banks to come up with new, attractive compensation schemes to attract customers' savings to banks. Banks have been told to focus on the old way of attracting 'small deposits' to increase deposits.
Such schemes have been launched
Implementing the notification, SBI has launched the 'Amrit Drishti' scheme, which offers 7.25 per cent interest on deposits for 444 days. Bank of Baroda has launched the 'Monsoon Dhamaka' deposit scheme, offering 7.25 per cent interest on deposits for 399 days and 7.15 per cent for 333 days. Other banks are also making efforts in this direction.