The Hindu Business Line : Chidambaram wants faster deposit growth

The Finance Minister, Mr P. Chidambaram, on Monday urged public sector banks to take a "good hard look" at how to grow their deposits to match the growing credit needs of the productive sectors of the economy.

He also advised the PSBs to re-balance their loan portfolios as a "pre-emptive" measure to head-off a possible concern on liquidity.

"There will be concerns on liquidity if the portfolios are not re-balanced and deposits don't grow. The overall deposit growth in the economy has not kept pace with the overall credit growth. It is universally agreed that to sustain credit growth of near 30 per cent, it is imperative that deposits grow by somewhere between 25-30 per cent," Mr Chidambaram told reporters after meeting the chief executives of PSBs here today.

While credit growth in the banking system has been around 30 per cent, the deposits are growing by about 20 per cent. The PSB chiefs informed the Finance Minister that they expect the credit growth to be "brisk" in the ongoing busy season.

Mr Chidambaram asked the Indian Banks' Association to go into the measures and initiatives, including policy steps, which may be needed to boost deposit growth and submit a report to the Government.

"Once the report is submitted, if there are issues to be addressed by the Government, then Government will address it. If there are issues to be addressed by the RBI, I will request RBI to address them," he said.

Citing the competitive environment for deposits mobilisation, the Finance Minister also underscored the need for the large, medium and small PSBs to be equal to the benchmark private sector banks.