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In a scenario when fixed deposit rates in the banking sector are set to fall further, banks might have a tough time in attracting deposits, says ‘Indian banking – the engine for sustaining India’s growth agenda’ on the sector from the Indian Chamber of Commerce and KPMG, the consultancy. It says more and more investors are looking at other investment avenues, such as mutual funds, insurance, real estate and commodities.
“While a rise in consumption is a given, all savings and investments going to banks is not. Banks would have to strive hard to attract deposits in the future, as the rising segment opens to other avenues for savings and investments such as mutual funds, insurance, real estate and commodities,” it says.
However, bankers disagree. “There is much competition from other investment avenues but banks will not be in a hurry to cut their deposit rates in the medium to long-term maturity tenures. They might do so in short maturity tenures,” said a senior official with a public sector bank.
The report says banks will have to revisit their strategies for attracting current accounts and savings accounts and term deposits. “Most banks will need to start putting together strategic plans and identify teams to focus on deposit raising, and move from the model of servicing walk-in customers to aggressively pursuing new customers through innovative bundling, promise of better returns, higher levels of customer service and attractive rewards programmes,” it said.
