FM asks PSBs to mobile larger deposits to avoid liquidity crunch

New Delhi, Nov 6 (UNI) Finance Minister P Chidambaram today enjoined upon Public Sector Banks (PSBs) to improve on deposit mobilisation to keep pace with the high credit growth to avoid a liquidity crunch.

At the customary meeting with CMDs of PSBs here, Mr Chidambaram spoke about the mismatch in credit and deposit growth asking them to re-balance their portfolios.

The Finance Minister asked Indian Banks Association (IBA) to work out ways in which banks can increase deposits.

"If there are any issues to be addressed by the Government, we will take care of that and if there are issues to be addressed by Reserve Bank of India, I will request RBI to address them," Mr Chidambaram said.

The credit growth of the banking sector has been about 30 per cent, while deposits have been growing at 20 per cent.

Mr Chidambaram said so far there was no liquidity crisis but caution needs to be exercised in the long run in the event of credit portfolios not being rebalanced.

The Finance Minister said while re-balancing portfolios care should be taken so that lending to productive sectors of the economy is not affected.

UNI GS CS VV1806