“When there is a credit offtake, banks can maintain and support that credit offtake only if they have higher deposits. They rely on central bank money to support the credit offtake on a perennial basis. Can’t trust… They have to mobilize their own resources. And money,” Das said during the post-policy meeting.
He said that banks have started passing the burden of hike in repo rates on their depositors and this trend is expected to continue.
led by RBI monetary policy committee On Friday, it raised the repo rate by 50 basis points to 5.40 per cent, taking it to pre-pandemic levels. The rate setting panel also decided to focus on the return of housing to ensure that inflation remains within the target while supporting growth going forward.
This is the third consecutive rate hike since May reserve Bank of India Steps in the fight against runaway inflation hovering above the tolerance band of 4-6 per cent of the central bank. The consumer price index (CPI) based inflation stood at 7.01 per cent in June.
In May, the RBI had increased the repo rate by 40 basis points and in June by 50 basis points.
After the hike in these rates, many banks have increased their deposit rates to some extent.
RBI Deputy Governor Michael Petra Said there was a very aggressive gathering of deposits, starting with bulk deposits.
“We are hopeful that the deposits will be cleared expeditiously,” Patra said.
Bank credit grew 12.89 per cent to Rs 122.81 lakh crore and deposits grew 8.35% to Rs 168.09 lakh crore in the fortnight ended July 15, according to RBI data.
Das said the most likely effect is that the rate hike will be passed on by banks to deposit rates.
“The trend has already started. Many banks have increased their deposit rates in recent weeks and this trend will continue,” he said.
Speaking on the liquidity scenario, the Governor said that the RBI will conduct a two-pronged operation to deal with the current liquidity situation.
He said there was a sudden pressure on liquidity for about three to four days last month due to very high GST and other tax collections, and hence, RBI did a fine tuning operation of injecting repos of three days maturity.
“Our effort will be to ensure that there is enough liquidity,” he said.
Asked whether there is concern about write-off of bad loans by banks as compared to recovery and upgradation, Deputy Governor MK Jain clarified that these are technical and prudent write-offs without waiving the right of recovery. Were.
“All these loans have been fully disbursed and this reflects prudence and better position of the balance sheet,” Jain said.
He said that as far as write-off is concerned, there has been a declining trend in the last two and a half years and the trend of upgradation of non-performing loans is increasing.
(with inputs from PTI)