With three weeks left for fiscal 2001-02 to end, public sector banks (PSBs) are lapping up deposits. The banks have not pared deposit rates despite a cut in administered rates, as they want to mop up as much possible funds before the year ends.
"Public banks have still not woken up to market realities. They cannot get out of the obsession of balance sheet growth. The focus today should be on profitability and not growth in balance sheet," said a senior bank analyst.
Between February 8 and February 22, aggregate bank deposits grew by Rs 5,417 crore -- more than the deposit growth in the previous two fortnights together. For the fortnight ending February 8, aggregate deposits grew by Rs 2,813 crore. while in the previous fortnight the growth was Rs 2,925 crore.
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The banks are also targeting corporates to mop up deposits. On the assets side also they have started disbursing loans to companies with which they were not comfortable with till recently.
"As the year comes to an end, they want to show credit growth too and, hence, are not selective about the profile of companies. The single-point agenda is to grow. Some of them may end up with higher non-performing assets (NPA)," said a private banker.
The gross NPAs of the sector has gone up in the current fiscal, analysts said.
Most of the banks are likely to lower the deposit rates in April, said a senior official with a Mumbai-based PSB.
Bankers also point out that corporates, which use around 30 to 40 per cent of their credit limits, also tend to increase their credit offtake to around 90 to even 100 per cent by the year-end. This happens as they also have to pay advance taxes and also their budgeted expenditure such as advertisements are paid by the year-end. Corporates also tend to push up their sales in the last quarter thus requiring higher funds utilisation.
Even as major private and foreign banks are keeping off the deposit rush, smaller private banks are trying to boost their deposit base. ICICI Bank, in its run-up to the merger with ICICI, is also on a deposit mobilisation drive.