RBI Notice: Even though the Reserve Bank has not made any change in the repo rate, the interest rate on the loan remains high. As the interest rates remain unchanged, people tend to focus more on fixed deposits instead of putting money in savings accounts. According to a survey report released by industry body FICCI and Indian Banks Association (IBA), the increase in FDs has resulted in a decline in deposits in current and savings accounts.
Savings Account Update: Because the interest rate on deposits in current account and savings accounts (CASA) is very low, people are turning their money into fixed deposits. But if more money is deposited in these CASA accounts, the banks get better profits, but the banks are losing money because people are shifting money to fixed deposits because the interest is higher.
FD ratio has increased
According to the report of the 17th round of FICCI-IBA survey, ‘In view of high interest rates, people are more interested in FDs. In the current round of the survey, more than half (57 per cent) of the participating banks have recorded a decline in the share of current and savings account deposits in total deposits, while on the other hand, FDs have increased.
Decline in NPA
The survey revealed that 75 per cent of banks have recorded a decline in their NPA in the last six months, compared to 90 per cent in the previous phase. 90 percent of public sector banks are said to have reduced their NPA. At the same time, 80 percent of private sector banks have reported a decline in NPA.
According to the survey, at the current stage, around 54 per cent banks expect gross NPA to come down by three to four per cent in the next six months.
Signs of increase in long term loans
The survey also revealed that infrastructure debt is increasing. In the survey, it is noted that long-term loans have increased by 67 per cent, as compared to 57 per cent in the previous round. According to the study, credit in the non-food sector may increase in the next six months. About 42 percent of respondents to the survey expect credit growth in the non-food sector to exceed 12 percent.