Banks are relying more on costly market borrowings instead of deposits to meet credit demand. Experts say that banks are yet to turn aggressive in mobilising deposits on concerns of getting stuck with expensive long-tenor term deposits when the interest rate cycle turns. An analysis shows that market borrowings by banks doubled to Rs 4.4 lakh crore in 2022.
“At this point in time, we are watching the next central bank move on the repo rate, so raising funds from the market makes sense because we can tweak the tenure. But with term deposits, there is no scope of repricing,” said a senior official at a private sector bank. “You don’t want to get stuck with really expensive deposits.
Source:
Economic Times
