Now Reading: Bank deposits hit record high after Rs 11 lakh crore surge in six weeks
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Bank deposits hit record high after Rs 11 lakh crore surge in six weeks
Bank deposits hit record high after Rs 11 lakh crore surge in six weeks
Indian banking system deposits jumped by a net Rs 11 lakh crore ($115 billion) over three fortnights to a record Rs 269.4 lakh crore as of July 31, RBI data shows. The…
The Story in Brief
Indian banking system deposits jumped by a net Rs 11 lakh crore ($115 billion) over three fortnights to a record Rs 269.4 lakh crore as of July 31, RBI data shows. The surge reversed a net reduction of Rs 3.87 lakh crore between April 1 and June 15. Traders attribute the jump mainly to dollar inflows from the RBI's discounted swap window for foreign-currency non-resident (FCNR) deposits, which attracted nearly $41 billion by end-July. One state-run bank trader told the Economic Times that conversion of dollars into rupees has gained pace, driving deposit growth.
The RBI launched the scheme in June to lure NRI funds and encourage cheaper dollar funding for lenders and state-run firms. ICICI Securities Primary Dealership said credit conditions should stay strong as the skew in the credit-deposit ratio corrects, helped by FCNR-driven deposit growth.
The Indian Opinion
The RBI's FCNR swap window is being cheered for filling banks' deposit gap, but the real test will come when these three-year deposits mature. The scheme essentially borrows expensive dollars now against the risk of rupee depreciation later. If the currency weakens sharply, the central bank's intervention to protect its swap position could squeeze liquidity exactly when credit demand is peaking. The question is not whether deposits grew, but whether this growth is durable or just sugar-rush liquidity that leaves the system more fragile.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
