Deposit growth is top issue for Indian lenders: Federal Bank
Deposit growth is the Indian banking sector’s biggest challenge as customers choose from an increasingly diverse range of investment alternatives, according to Shalini Warrier, retail business head at Federal Bank Ltd.
“There is no silver bullet for this,” Warrier said on Bloomberg TV Monday. When “fixed deposit rates don’t go up as much as customers would like them, they look for alternates.”
Deposit growth has lagged strong demand for credit in India for several quarters now, prompting top officials to weigh in. Finance Minister Nirmala Sitharaman and Shaktikanta Das, governor at the Reserve Bank of India, has urged banks to innovate in order to increase their deposits as household savings shift to investment products.
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Failure to boost deposits means loan growth may need to be “tempered down,” and “corporates will have to look for other alternative opportunities to raise funds,” Warrier said in her interview with Paul Allen and Avril Hong.
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Federal Bank’s most senior female executive, Warrier added that lending could also be hampered by a draft RBI proposal that would require banks to hold more
