Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das Urge Banks to Focus on Core Business
Union Finance Minister Nirmala Sitharaman has once again called on banks to concentrate on their core business activities. Speaking at a press conference after a post-budget meeting with the Central Board of Directors of the Reserve Bank of India (RBI), she emphasized the importance of collecting deposits and lending with more strictness.
Sitharaman stated, “The Reserve Bank and the Government are repeatedly telling the banks to pay attention to their core business activities. It is not that they are not paying attention, but collect deposits and lend with more strictness as this is the core business of banking.”
She also mentioned that she would be meeting with banks to discuss various issues, including priority sector lending and common schemes, to help grow the banks.
RBI Governor Shaktikanta Das echoed her concerns, noting that the gap between deposits and lending has been over 300 points for the past few months. He stressed the need for banks to be cautious and use their branch networks to come up with innovative schemes to reduce this gap.
Das explained that the situation could vary from bank to bank, with some banks launching special drives to raise deposits by offering higher interest rates. He also highlighted the importance of CASA (Current Account Savings Account) deposits, which are a major source of funds for banks because they are cheaper than term deposits.
“So this is completely deregulation and it’s for the bank to decide taking into account overall financial sector and macroeconomic conditions and the situation with regard to their balance sheet,” added Das.
Doubts Revealed
Finance Minister -: The Finance Minister is a government official in charge of managing the country’s money, including taxes and spending. In India, this person is Nirmala Sitharaman.
Nirmala Sitharaman -: Nirmala Sitharaman is the current Finance Minister of India. She is responsible for the financial and economic policies of the country.
RBI Governor -: The RBI Governor is the head of the Reserve Bank of India, which is the central bank of the country. The current RBI Governor is Shaktikanta Das.
Shaktikanta Das -: Shaktikanta Das is the current Governor of the Reserve Bank of India. He oversees the country’s monetary policy and banking regulations.
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India, which controls the supply of money and interest rates in the country.
Core Business -: Core business refers to the main activities that a company or organization does to make money. For banks, this means collecting deposits from people and lending money to others.
Deposits -: Deposits are the money that people put into their bank accounts. The bank keeps this money safe and can use it to give loans to others.
Lending -: Lending is when banks give money to people or businesses with the agreement that they will pay it back later, usually with some extra money called interest.
Innovate -: To innovate means to come up with new and creative ideas or methods. In this context, it means banks should find new ways to improve their services.
Gap between deposits and lending -: This gap refers to the difference between the amount of money banks collect from deposits and the amount they lend out. A large gap can be a problem because it means banks are not using their money efficiently.
300 points -: In finance, points often refer to basis points, where 1 point equals 0.01%. So, 300 points mean 3%. This indicates a significant difference in the context of banking.
Branch networks -: Branch networks are the different physical locations of a bank where customers can go to do their banking activities. Banks use these branches to reach more people.
Innovative schemes -: Innovative schemes are new and creative plans or programs that banks can use to attract more customers or improve their services.