State Bank of India Chairman Dinesh Khara said on Friday that he does not foresee any challenges for the bank in deposit mobilisation, despite the intensified competition among banks to attract deposits by raising short-term deposit rates.
While speaking on the sidelines of the 38th regional conference of the Western India Regional Council, Khara said, “We are in a position to support our loan book growth well. So, I think as long as we can support the loan book growth well, I don’t think we have any challenge.”
In response to declining deposits, several Indian banks have introduced limited-period special fixed deposit schemes with higher interest rates for specific tenures.
HDFC Bank, India’s largest private-sector lender, rolled out a special edition fixed deposit (FD) scheme, offering attractive interest rates for select tenures of 35 and 55 months. Customers can earn 7.35 per cent interest for a 35-month deposit and 7.4 per cent for a 55-month deposit for amounts below Rs 3 crore.
ICICI Bank recently updated its FD interest rates, effective from July 2, 2024. The revised rates range from 3 per cent to 7.20 per cent for regular customers and 3.5 per cent to 7.75 per cent for senior citizens. Similarly, Axis Bank adjusted its term deposit rates from July 1, 2024, with rates also spanning 3 per cent to 7.2 per cent for regular customers and 3.5 per cent to 7.75 per cent for senior citizens.
Further addressing the challenges of deposit growth in the banking system and the booming mutual fund industry, Khara said that in developing countries, the banking system typically surpasses the size of the markets.
“When we look at the developed markets, there we have seen the markets become bigger than the banking system. But as of now, of course, in the developing countries, we have generally seen that the banking system is bigger than the markets. But if you look at the UK also, even in the UK, the banking system continues to be bigger than the markets. So, I think much of it will be the choice of the investors and the kind of products which will be rolled out by the banking system,” he said.
SBI’s credit growth stood at 15.39 per cent on a year-on-year basis in the first quarter of the current financial year, with domestic advances growing at 15.55 per cent year-on-year, and foreign offices’ advances rising by 14.41 per cent year-on-year.
Total deposits of the bank grew 8.18 per cent to Rs 49,01,726 crore as of June 30, 2024, compared to Rs 45,31,237 crore as of June 30, 2023, out of which CASA deposits grew by 2.59 per cent year-on-year. The CASA ratio slipped 218 basis points to 40.70 per cent as of June 2024.
First Published: Aug 23 2024 | 5:42 PM IST
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