Union Finance Minister Nirmala Sitharaman has urged banks to focus on ‘core banking’. Nirmala Sitharaman said this in a post-budget meeting with the Central Board of Directors of the Reserve Bank of India (RBI) on August 10 (Saturday).
The Finance Minister said, ‘Banks need to focus on their fundamental operations. The government and RBI are constantly asking banks to focus on core banking, including deposit collection and lending money.’
To remove the imbalance between deposits and lending, Sitharaman asked banks to develop innovative and attractive deposit schemes to raise funds from the people.
Banks have the right to decide their interest rates: RBI Governor
Addressing the meeting, RBI Governor Shaktikanta Das said that banks can decide their interest rates, as both deposit and lending rates are de-regulated.
Das had expressed concern over the imbalance between deposits and lending
On August 8, while presenting the bi-monthly monetary policy, the RBI Governor expressed concern over the imbalance between deposits and lending in the banking sector. He had said that banks are resorting more to short-term non-retail and other liability instruments to meet the growing credit demand.
Structural liquidity issues may arise in the banking system
Das warned, ‘This may create structural liquidity issues in the banking system.’ The RBI Governor had said that therefore banks can focus more on mobilising domestic financial savings through offering innovative products and services and taking full advantage of their branch network.
