Banks may have to strive hard to attract deposits: Report

India Infoline News Service | Mumbai |

Banks will have to revisit their strategies for attracting current account, savings account and term-deposits

While a rise in consumption is a given, all savings and investments going to banks is not, KPMG said in a report.

The report titled ‘Indian banking – the engine for sustaining India’s growth agenda’ was issued by the Indian Chamber of Commerce and KPMG.

Banks would have to strive hard to attract deposits in the future as the rising segment opens up to other avenues for savings and investments such as mutual funds, insurance, real-estate and commodities, the report said further.

Statistics by the Reserve Bank of India (RBI) indicate that the share of claims on the government, which largely reflects small savings, that had picked up over the years, particularly during the first half of 2000s, declined during the second half largely in response to the unchanged (administered) interest rates on small savings since 2003-04.

In fact, households disinvested their holdings of small savings during 2007-08 and 2008-09. Banks will have to revisit their strategies for attracting current account, savings account (CASA) and term-deposits.

Most banks will need to start putting together strategic plans and identify teams to focus on deposit raising, and move from the model of servicing walkin customers, to aggressively pursuing new customers through innovative bundling, promise of better returns, higher levels of customer service and attractive rewards programmes.
 

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