PremiumThe Reserve Bank of India (RBI) is likely to hold a meeting with CEOs of public sector banks on Wednesday to discuss issues such as sustainability, pricing, and slower growth in deposits. Also, asset quality in sectors like retail and MSME will be brought up for discussion. Additionally, in the meeting, the functioning of Digital Banking Units will be reviewed. Scheduled commercial banks (SCBs) deposit growth has been around single-digit, while there has been a robust uptick in credit growth.
According to the PTI report, sources said that as per the agenda circulated for the meeting --- sustainability, including pricing and slow growth of deposits, would be discussed. Further, there would be deliberation on asset quality in the retail and MSME segment.
Apart from this, the sources added that the meeting would also review the functioning of Digital Banking Units launched by Prime Minister Narendra Modi last month.
As per RBI's latest weekly data, outstanding aggregate deposits as of October 21, 2022, stood at over ₹172.03 lakh crore -- declining by ₹60,116 crore over the fortnight. Year-on-year, the growth is around 9.5% compared to a growth of 9.9% a year ago. Meanwhile, bank credit climbed to more than ₹128.89 lakh crore as of October 21 -- rising by ₹29,086 crore in a fortnight. The credit growth was around 17.9% yoy.
Further, data from RBI showed that there has been a slower increase in deposit rates than compared to lending benchmark rates despite it hiking the policy repo rate by 190 basis points since May 2022.
In September, the weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits of SCBs climbed by only 9 basis points to 5.38% compared to 5.29% in August. On the other hand, the weighted average lending rate (WALR) on fresh rupee loans of SCBs increased by 26 basis points (bps) from 8.33% in August to 8.59% in September 2022.
Last month, the government dedicated 75 Digital Banking Units across 75 districts to the nation. The DBUs will enable those who do not have ICT infrastructure to access banking services digitally. They will also assist those who are not tech-savvy to adopt digital banking.
DBU will offer services like banking facilities like the opening of savings accounts, balance-check, print passbooks, transfer of funds, investment in fixed deposits, loan applications, stop-payment instructions for cheques issued, applications for credit/debit cards, view statement of account, pay taxes, pay bills, make nominations, etc. The DBUs will also facilitate onboarding to Government credit link schemes through the Jan Samarth portal and end-to-end digital processing of small-ticket MSME/retail loans.
In August, the Union Cabinet approved the enhancement in the limit of the Emergency Credit Line Guarantee Scheme (ECLGS) by ₹50,000 crore from ₹4.5 lakh crore to ₹5 lakh crore, with the additional amount being earmarked exclusively for enterprises in hospitality and related sectors. The increase has been done on account of the severe disruptions caused by the COVID-19 pandemic on hospitality and related enterprises.
ECLGS is a continuing scheme and the additional amount of ₹50,000 crore would be made applicable to enterprises in hospitality and related sectors till the validity of the scheme which is March 31, 2023.