MUMBAI (Reuters) – Indian banks need to carefully monitor the gap between credit and deposit growth to avoid a potential structural liquidity issue, the governor of the Reserve Bank of India (RBI) said on Tuesday.
“Young Indians are aspirational. They get attracted to different markets. There is nothing wrong in it, it’s a natural process and a positive development,” Shaktikanta Das told local television channel NDTV Profit in an interview.
“We are cautioning banks to monitor this situation carefully. There is no problem now, but it can become a structural liquidity problem in the future.”
Indian banks’ loans rose 13.7% as of July 26 from a year earlier, while deposits grew 10.6%, latest provisional data from the RBI showed.
Healthy economic growth and rising urban consumption has boosted loan demand but deposit growth has lagged.
Banks must garner more deposits through innovative products and service offerings, Governor Das said.
While credit growth and disbursement has become fast paced due to technology, deposit mobilisation, done largely through physical channels, was lagging, he said.
(Reporting by Siddhi Nayak; Editing by Mrigank Dhaniwala)
