RBI: Money is disappearing rapidly from banks, RBI governor expressed concern; told what is the reason?

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Shaktikanta Das: In the recent past, the growth of money deposited in banks has declined rapidly. In comparison, loan growth has increased. In such a situation, RBI Governor Shaktikanta Das has expressed concern.

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Slower Deposit Growth: Deposit growth in banks has been falling for some time and credit growth is increasing. RBI Governor Shaktikanta Das also warned about this. Recently, the country's largest private bank HDFC has also decided to focus on savings instead of loans. The Reserve Bank Governor said that deposit growth, has been lagging behind loan growth for some time. This may expose the structure liquidity issue of banks. Das also said that apart from other investments, this change has come due to customers focusing more on mutual funds instead of bank deposits.

There is a need to prepare a strategy for the future.

The RBI governor said that the money given as a loan comes back to the banks in the form of deposits. But at present, the regulator has expressed concern over this and said that there is a need to recognize this crisis and prepare a strategy accordingly in the future. Earlier, most people used to deposit money in banks only. But now they are investing their savings in different places. Investment options have increased in the form of mutual funds, insurance, and pension funds as compared to earlier. This is causing problems for the banks because the amount of deposits with them is continuously decreasing.

There is also a problem in managing cash.

To meet the shortage of deposits, banks are taking short-term loans and issuing certificates of deposit. But due to this, the change in interest rates affects them more and they also face difficulty in managing their cash. The RBI governor said all this during a program of Financial Express. Shaktikanta Das expressed concern that the deposits in banks are not increasing as fast as they should. He said that during the first quarter of the current financial year, bank deposits have grown at a rate of only 10.6%, as compared to a growth of 14% in bank loans.

A strong system is needed to handle fluctuations

RBI Governor says that the banking crisis in America and Europe has revealed that banks need a strong system to manage cash (liquidity) and to handle fluctuations in interest rates. Therefore, the Reserve Bank of India (RBI) is revisiting the rules of liquidity coverage ratio for banks so that any kind of problem can be avoided. Das also said that with the increase in digital transactions, banks will also have to take care of cyber security.

He said online fraud is increasing rapidly. Fraudsters are using 'mule bank accounts' a lot. These are accounts that are opened by someone else and then the fraudsters deposit the money earned through their fraud in them. This may happen with the consent of the person opening the account or without his consent. Das says that such accounts not only cause financial loss to the banks but also create problems in their functioning and also harm their reputation.