RBI tells banks to find ways to bridge the gap between credit and deposit growth
banks to find ways to bridge the gap between credit and deposit growth and reduce credit-deposit ratio, raising concerns over the persistent higher credit growth than deposit mobilisation which could pose a risk in business sustainability.
The central bank Governor Shaktikanta Das held a meeting with the heads of public sector banks and select private sector lenders Wednesday where he spoke about high credit-deposit ratio, the resultant liquidity risk management challenges, trends in unsecured retail lending as well as cybersecurity and third-party risks and the need for improving customer services.
He also highlighted the importance of further strengthening the governance standards, risk management practices and compliance culture in banks.
«The governor stressed on the need to reduce the credit-deposit ratio,» said a top banker who attended the meeting. «He also talked about cyber-security, customer service among other issues in this periodic meeting,»
In the latest financial stability report released last week, RBI said that credit growth in excess of 18% could lead to «higher impairments», given the trend of credit growth outpacing deposit mobilisation for a long period of time.
«The issue of high credit deposit ratio came up but that is more of an issue for private sector banks because public sector banks have CR ratios within the 75%-80% range. The RBI reiterated the need for banks to balance their credit-deposit ratio,» said another bank CEO present in the meeting
On a sectoral level, credit growth was
