Ashima Goyal, an external member of the Reserve Bank of India's Monetary Policy Committee (MPC), emphasized the need for banks to make retail deposits more appealing to customers.
Goyal highlighted the tendency of banks to offer better interest rates for bulk corporate deposits, neglecting retail deposits that contribute significantly to long-term liquidity.
In an interview with Piyush Shukla, Goyal stressed on the importance of enhancing interest rates for retail customers, considering they constitute the bulk of bank liquidity.
Regarding the imbalance between deposit and credit growth in FY25, Goyal suggests that banks focus on improving the attractiveness of deposits to address this issue.
While credit growth may outpace deposit growth, Goyal warned against overreliance on quick credit expansion, emphasizing the importance of maintaining credit quality.
She also addressed concerns about certain segments experiencing rapid credit growth, particularly credit card loans, highlighting the need for prudent measures to manage risks associated with such growth.
On the potential for a rate cut in FY25, Goyal anticipates faster transmission to fresh deposits and loans due to high demand and competition.
She acknowledged that transmission to outstanding deposits and loans may take longer, but notes substantial transmission through markets.
Regarding climate change risks affecting food prices and inflation, Goyal explained that under the flexible inflation targeting framework, the MPC can overlook transient supply shocks as long as inflation expectations remain anchored.
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