War for deposits will intensify

For most banks, the liability part of the balance sheet has been on autopilot, and the strategies have evolved around credit growth and recovery of bad loans. Now the story has to change

Tamal Bandyopadhyay

While driving from the Chhatrapati Shivaji Maharaj International Airport to Bandra Kurla Complex, Mumbai’s second business district, on the Western Express Highway, large billboards on rising deposit rates of banks scream for attention. When did you last see such a war for deposits?
I have checked with many bankers, and even central bankers. None of them can recall when. There might have been skirmishes for deposits in the past, but not a war of such scale. A vibrant social media is also making us aware of its intensity. A few months ago, a short video clip showing Canara Bank hawking deposits in a Mumbai suburb went viral on WhatsApp.
The Reserve Bank of India (RBI) gave banks the freedom to decide on rates for fixed deposits in the mid-1990s; the savings bank rate was freed in 2011. On the current account, customers don’t earn any interest.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Jan 22 2023 | 5:31 PM IST

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