Banks adopt different strategies in deposits race: Jefferies
Reserve Bank of India keeps tightening monetary conditions — deposits. Conventional business approach is to raise interest rates to get more funds, but this time is different, says Jefferies.
While HDFC Bank is opening branches to net more depositors, Kotak is tapping its digital highway.
Axis, which bought Citi's retail assets, is chasing salary accounts and IndusInd Bank is tapping the NRIs, said Jefferies.
«With gap between credit growth and deposit growth expanding during the year to 6 percentage points at the peak, banks have been pushed to invest in expanding networks with an objective to boost their deposit mobilisation,'' said Prakhar Sharma, analyst at Jefferies.
„It is interesting that different banks are adopting different strategies to drive growth in retail deposits.“
Indian banks have been pressured for deposits as the RBI reduces money available in the system to fight price pressures. Credit is growing at 15% when deposits are climbing 12%.
For the system as a whole, the incremental credit-to-deposit ratio is about 130%.
HDFC Bank, which recently merged parent mortgage lender with itself, has expanded the branch network by 39% in two years and Kotak Mahindra is offering higher rates on term deposits.
Axis is getting more deposits from its wealthy clients in the Burgundy segment while IndusInd is targeting overseas Indians. „We feel private banks are in a better place to grow deposits than PSU banks, as they are expanding branches and product offerings to drive growth,'' said Sharma.
