State Bank of India Chairman Dinesh Khara on Friday said he does not foresee any challenge for the bank in mobilizing deposits, despite intensifying competition among banks to attract deposits by increasing short-term deposit rates.
Speaking at the 38th regional conference of the Western India Regional Council, Khara said: “We are in a position to support the growth of our loan portfolio. So, I think as long as we can support the growth of our loan portfolio, I don’t think we will have any problem.”
In response to declining deposits, several Indian banks have introduced special limited-period fixed deposit schemes with higher interest rates for specific tenors.
HDFC Bank, India’s largest private lender, has launched a special fixed deposit (FD) scheme, offering attractive interest rates for select tenors of 35 and 55 months. Customers can avail 7.35 per cent interest for a 35-month deposit and 7.4 per cent for a 55-month deposit for amounts below Rs 30 crore.
ICICI Bank recently updated its fixed deposit interest rates, which will be effective from July 2, 2024. The revised rates range from 3% to 7.20% for regular customers and 3.5% to 7.75% for senior citizens. Similarly, Axis Bank adjusted its fixed deposit rates with effect from July 1, 2024, with rates also ranging from 3% to 7.2% for regular customers and 3.5% to 7.75% for senior citizens.
Further addressing the challenges of deposit growth in the banking system and the burgeoning mutual fund industry, Khara said that in developing countries, the banking system generally outgrows the size of the markets.
“If you look at developed markets, you see that the markets have become bigger than the banking system, but of course in developing countries, generally, we have seen that the banking system is bigger than the markets, but if you look at the UK, even in the UK, the banking system is still bigger than the markets. So, I think a lot of this will depend on the choice of investors and the kind of products that the banking system will launch,” he said.
SBI’s credit growth stood at 15.39 per cent YoY in the first quarter of the current fiscal year, with domestic advances growing 15.55 per cent YoY and foreign office advances increasing 14.41 per cent YoY.
The bank’s total deposits grew by 8.18 per cent to Rs 49,01,726 crore as on June 30, 2024, as compared to Rs 45,31,237 crore as on June 30, 2023, of which CASA deposits grew by 2.59 per cent year-on-year. The CASA ratio declined by 218 basis points to 40.70 per cent as on June 30, 2024.
First published: August 23, 2024 | 17:42 IS
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