Finance Minister Nirmala Sitharaman urged banks on Saturday to devise innovative and appealing schemes to boost deposit mobilisation. Speaking after the Reserve Bank of India’s board meeting, she said that deposits and lending are like two wheels of a cart, with deposits currently lagging behind.

Sitharaman expressed concern over the slow growth in deposit collection, noting that small savers are increasingly exploring alternative investment options, such as the stock market.

She called on banks to make deposits more attractive and address the widening gap between deposits and lending. She also highlighted the importance of focusing on core banking activities, particularly the mobilization of deposits and extending credit to those in need of funds.

RBI Governor Shaktikanta Das echoed these concerns, pointing out that while interest rates are deregulated, banks often adjust deposit rates to attract funds. He observed that banks have been increasingly relying on short-term non-retail deposits and other financial instruments to meet the rising demand for credit.

Earlier in the week, while announcing the monetary policy, Das also raised alarms about the growing imbalance between deposits and lending in the banking sector.

He warned that banks’ reliance on short-term non-retail deposits could potentially expose the banking system to structural liquidity challenges. Das said that banks need to focus on mobilising household financial savings through innovative products and services, fully leveraging their extensive branch networks to attract more deposits.