Some of the public sector banks are likely to approach the Finance Ministry to seek more time for complying with the norm to reduce bulk deposits to 15% of the total deposits
Mumbai: Some public sector banks (PSBs) are likely to approach the Finance Ministry to seek more time for compliance of the directive regarding reduction of bulk deposit, reports PTI.
"Some of the public sector banks are likely to approach the Finance Ministry to seek more time for complying with the norm to reduce bulk deposits to 15% of the total deposits," a banking source said.
The Finance Ministry has directed public sector banks to reduce their bulk deposits to 15% of the total deposits in order to improve profitability and sound asset-liability management, by end of this fiscal.
Public sector banks like Punjab and Sind Bank, Corporation Bank and Indian Overseas Bank among others have bulk deposits of more than 15% as of now.
"Banks with higher bulk deposit can not reduce it to 15% during this period when deposit mobilisation is slow in the system," the source added.
According to RBI data, while credit growth had grown 17.2% as of 27th July, deposit growth was 13.8%.
The deposit growth was lower than the RBI's projection of 16% for the current financial year.
To mobilise deposits, many public sector banks, including Bank of Baroda and Central Bank of India, have increased deposit rates on long-term tenors.
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