Public sector banks in India, including the State Bank of India, are urging the government to permit incentives to increase deposits, which have declined and impacted credit flows. Deposit growth in FY24 lagged behind credit growth, forcing banks to use higher-cost Certificates of Deposit (CDs) to fill funding gaps.
Banks have suggested reducing the lock-in period for tax-saving fixed deposits from five to three years to make them more attractive compared to equities and mutual funds.
In FY24, deposits grew by 12.9% compared to a 16.3% rise in credit, as investors chose alternative investments.
In May, mutual fund investors committed record funds to equities, totaling ₹34,697 crore, up from ₹18,917 crore in April, driven by several new fund offers. Systematic investment plans (SIPs) reached a new high of ₹20,904 crore.
Debt funds saw inflows of ₹42,295 crore as corporates took advantage of higher rates. The industry’s total average assets under management increased to ₹58.59 lakh crore.
Despite potential volatility from various factors, investor confidence remained strong
Cred is considering offering secured credit products, including two-wheeler, four-wheeler, and home loans. Cred has conducted market research and discussed plans with lending partners.
Currently, Cred sources ₹1,800 crore to ₹2,000 crore in unsecured consumer credit monthly. The firm aims to enhance customer experience beyond simply redirecting to lenders.
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