Banks should mobilise more deposits to satisfy credit demand: Rakesh

Mumbai, Sep 26 (UNI) The Reserve Bank of India's Deputy Governor Rakesh Mohan today said that domestic banks need to step up efforts to increase their deposit base to be able to continue to satisfy demand for credit.

''As banks' government bond holdings approach statutory limits, they need to mobilise more deposits to meet credit growth,'' he said at a banking conference 'Global banking: Paradigm Shift towards meeting emerging challenges' organised by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks Association jointly.

He emphatically said, ''It's important for banks to focus on deposit growth,'' while pointing out that banks in India have so far been able to maintain high lending growth because they could liquidate their stock of government bonds. ''As government bonds approach the 25 per cent minimum limit set by RBI, banks need to focus on ways to raise deposits.'' Explaining, Mr Mohan said credit growth is currently higher than the RBI's projections for the current financial year ending March 31, 2007. Credit growth was over 31 per cent on year for the two weeks that ended September 01, 2006 above the RBI's comfort level of 20 per cent for the year, while deposits grew more slowly at 21.3 per cent on year in the same period, he pointed out.

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