Finance Minister Nirmala Sitharaman emphasized the importance of banks focusing on their core business—deposit collection and lending on  August 10.

FM, along with Union Minister of State for Finance Pankaj Chaudhary and RBI Governor Shaktikanta Das, addressed the Central Board of Directors of the Reserve Bank of India (RBI) at the customary post-Budget meeting in New Delhi.

Sitharaman expressed concern over the slow pace of deposit collection, likening it to one of the two wheels of a cart that isn't turning fast enough. "Banks need to make deposits attractive," she said, noting that even small savers now have alternative investment options such as the stock market. She urged banks to develop innovative and attractive schemes to mobilize deposits and address the growing mismatch between deposits and lending.

RBI Governor Shaktikanta Das echoed these concerns, highlighting that while interest rates are deregulated, banks often raise deposit rates to attract funds. He noted that banks have increasingly turned to short-term non-retail deposits and other instruments to meet the rising credit demand.

Earlier in the week, Das, while announcing the monetary policy, also voiced concerns about the growing imbalance between deposits and lending within the banking sector. He noted that banks have increasingly relied on short-term non-retail deposits and other liability instruments to fulfill the rising credit demand.

The Finance Minister plans to engage further with banks, particularly on priority sector lending and strategies to enhance deposit collection. "My emphasis would be the same with the banks - I would be meeting banks for priority sector lending and to go back and collect deposits," she said.