Shaktikanta Das, the governor of the Reserve Bank, has alerted banks to the significant discrepancy between the growth rates of deposits and credit.
During a meeting on Wednesday, Das insisted on more advancement in the areas of governance standards, risk management procedures, and compliance culture from the heads of public and some private sector banks.
During the meeting, Das emphasized the importance of having strong cybersecurity controls and efficient third-party risk management. In order to combat digital fraud, he asked the bankers to increase their efforts in combating "mule accounts" and to step up customer awareness and education campaigns.
Mule accounts for money laundering
Scammers deceive people into opening mule accounts in order to launder money. A leading provider of digital fraud detection software, BioCatch, has alerted users to the growing number of mule accounts, with at least Rs 1.8 crore going through some of them.
According to an RBI statement, topics discussed at Das's meeting with bankers included the ongoing discrepancy between the growth of credit and deposits, patterns in unsecured retail lending, credit flows to MSMEs, and expanding the use of the rupee for international transactions.
Deposit growth declining
Because deposit growth has been trailing credit growth, the RBI has been pressuring banks to accelerate it.
According to recent data, system deposit growth was 12.6 percent, while bank credit increased by 19.2 percent. In order to preserve their margins, banks have not increased deposit rates in tandem with rising lending rates.
The meeting was a part of the RBI's ongoing interactions with regulated entities' senior management, according to the RBI. During his address to meeting, the governor highlighted the ongoing progress in the asset quality and loan provisioning of banks.
