http://www.business-standard.com/india/news/banks-may-shed-rs-3-lakh-cr-in-bulk-deposits/484547/
With the government driving banks to reduce dependence on wholesale funds, public sector banks (PSBs) may shed bulk deposits worth Rs 3,00,000 crore ($55 billion) over the next few quarters, according to estimates of Deutsche Bank Securities.
While banks had begun task (to prune bulk deposits) in earnest, the move was fraught with challenges, said public sector bank executives. First, the immediate replacement of bulk money with low-cost funds — current and savings account (Casa) deposits and term deposits is tough. Second, cutting down bulk money might moderate the pace of overall deposits’ mobilisation, a situation banking regulator may not be happy with.
Analysts said this move (fall in bulk deposits) would further moderate the deposit growth. The RBI data show annual deposit growth slowed to 14.3 per cent in August 2012, from 17.4 per cent in March 2012. A senior executive with a Kolkata-based public sector lender said though retail deposits were definitely less volatile, banks would have to continue to give attractive rates to get money. Plus, the change in profile of deposits composition is a gradual process.
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