MFs, Insurers, Pension Funds Should Play a Role in Funding Credit Needs of Economy Says SBI Chairman

Mumbai: With credit growth outpacing deposit growth, potentially leading to liquidity challenges for banks, the head of the country’s largest lender State Bank of India (SBI) on Wednesday called on the various financial services players in meeting the credit needs of the fastest growing economy.

Speaking at the Bengal Chamber of Commerce’s Financial Market Conclave 2024, SBI chairman CS Setty said, “It’s not that deposits are not growing but the challenge has come because credit growth has overtaken deposit growth… So here the issue is continued credit growth, how will it be funded? Can it be funded only by deposits and if there are some household savings which were earlier captured by the banking system but are now being captured by other financial players then what role these financial players have to play in meeting the credit needs of the economy.”

“I think, some of the future credit growth and funding also has to be done by some of the new age financial services players and not just the market. When I say market, it's not just capital market but it is mutual funds, it is insurance funds, pension funds, they all have to come into corporate financing,” added Setty.

He also warned that the Indian banks’ share of low-cost deposits i.e Current and savings account (Casa) deposits which have been moderating in the last few years could moderate further due to the enhanced cash management efficiency of government and corporates.

“The pre Covid-19 level of CASA ratio was 40 per cent, whereas it rose to 45 per cent post pandemic. Obviously, it is going back to 40 per cent, and it may further go down if the efficiency of government cash management comes into picture,” he said.