Bank deposits down, money flows into mutual funds

RBI Governor Shaktikanta Das has expressed concern over the slow drift of bank deposits from household savings. The governor spoke about the same at a recent banking and finance summit. The main concern is that investors moving away from traditional channels, including savings deposits in banks, could lead to liquidity problems in the country. In recent times, household investments have increasingly flowed into mutual funds and other financial products.

In the past, families and individuals kept their deposits in banks. But the growth of stock market and ease of investing attracts many people to stock market and mutual funds.

• 10 Business Ideas for Entrepreneurs 2024
• Business vs Job: Unraveling the Pros and Cons of Each Path
• Businesses should know Japan’s ‘Genchi Genbutsu’ principle
• Balancing Business Studies with Work: just keep these things in mind
• Mobile apps in Dubai to prevent online scams

He also shared his concern that banks are focusing on raising credit levels rather than attracting investment. He reminded the banks that it is necessary to take steps to attract investment.
At present, banks regulate the loan-to-deposit ratio through short-term loans, certificates of deposit, etc. This will change with movements in interest rates and create liquidity challenges, he says. He also added that banks need to be cautious about the shift away from current savings account (CASA) deposits.