PSBs may approach FM for extension to comply with bulk deposit norms
Mumbai: Some public sector banks are likely to approach the Finance Ministry to seek more time for compliance of the directive regarding reduction of bulk deposit.
"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 percent of the total deposits," a banking source said.
Finance Ministry has directed the public sector banks to reduce their bulk deposits to 15 percent 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 percent as of now.
"Banks with higher bulk deposit can not reduce it to 15 percent 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 percent as of July 27, deposit growth was 13.8 percent.
The deposit growth was lower than RBI's projection of 16 percent 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.