State Bank of India, the country’s largest lender, will focus on small-ticket Prime Minister Jan Dhan Yojana (PMJDY) accounts to boost liquidity, managing director Ashwini Tewari said on Wednesday. "We are focusing on the small-value, small-ticket accounts to raise deposits. Jan Dhan is something we have not focused on (previously), which we will do," Tewari said at the Global Fintech Festival (GFF). Some banks are looking at bulk deposits but those are inherently unstable as they can go away with interest rate movement, he said, adding that retail deposits are far more stable. He also said if the market demands, the bank will have to raise deposit rates. Tewari said a correction in the equity markets over time can help banks get back the deposits it has ceded. Speaking on the sidelines of the GFF, he told reporters that the capital markets rally has seen a shift of money away from the banks to the higher yielding alternatives. “As the market corrects over time, some of the money that was earlier with us will come back,” he added. For nearly 18 months, credit growth has been surpassing deposit growth, forcing lenders to raise rates and compromising margins, and has also led to fears of banks being forced to temper loan growth. “Deposit growth has relatively slowed down and this has been flagged by the RBI also. And therefore, banks have been trying to do various things like raising deposit rates, reaching new segments,” he said. The banking sector regulator’s moves on higher risk weights on unsecured loans and proposals on higher provisioning for project loans are a signal for tempering deposit growth, Tewari said. “By placing some restrictions or risk rates on slightly faster growing segments and riskier segments, like unsecured loans and then the draft circular on project finance, the signal is that if these segments which are riskier are growing faster, then you have to actually temper it down. That is the larger signal,” he added. He said nearly 90% of the funds fuelling credit for the banking system used to come from deposits, and the share is coming down as the banks are forced to go for other instruments like infrastructure bonds. Tewari further said the bank is not seeing any higher delinquency on the micro loans portfolio. He also said there is a scope for the volumes on central bank digital currency to go up.
