State Bank of India (SBI) Chairman Dinesh Khara is confident about the bank's position despite concerns of a slowdown in deposit growth, saying the lender continues to deliver strong asset growth. Khara's statement comes amid growing concerns of the Reserve Bank of India (RBI) and the government about a slowdown in deposit growth in the banking sector. With loan growth slowing to 13.8 per cent and deposit growth falling to 10.3 per cent in the last 15 days, the issue has attracted a lot of attention.
Why is RBI worried?
The speed at which the people of the country are showing interest in mutual funds and stock market is raising questions about the future of banks. RBI Governor Shaktikanta Das has warned several times, while the Finance Minister has recently appealed to the public sector banks to develop new strategies to attract more deposits.
On these concerns, Khara said that we are in a position to support our loan book growth well and as long as we can do that, I don't think we have any challenges. He emphasized that SBI is managing its resources by eliminating excess investments in government securities, currently over Rs 16 trillion, to ensure adequate funds to lend.
Growth seen on yearly basis
In the first quarter of the current fiscal, SBI recorded a year-on-year growth of 8.18 per cent in deposits to Rs 49.02 trillion from Rs 45.31 trillion in the same period last year. However, there was a marginal sequential decline of 0.29 per cent in deposits. As Khara prepares to step down on August 28 after spending nearly four years at the helm of SBI, he reiterated the bank's ability to sustain growth through strategic resource management. SBI in its latest report had challenged the notion that deposit growth in the banking sector is slowing down, calling it a statistical myth.
this is the truth
While it is true that loan growth has outpaced deposit growth in recent years, the report argues that deeper analysis paints a different picture. In FY23, all scheduled commercial banks (ASCBs) recorded the highest absolute growth in both deposits and loans since 1951-52. Deposits grew by Rs 15.7 lakh crore, while loans grew by Rs 17.8 lakh crore, taking the incremental credit-deposit (CD) ratio to 113 per cent. This momentum continued in FY24, with deposits growing by Rs 24.3 lakh crore and loans by Rs 27.5 lakh crore.
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