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Tuesday, 12 April 2016

Why banks are unable to draw savers despite high interest rates

A relatively high real interest rate is still not encouraging savers to deposit money with banks, resulting in shortage of funds with banks for lending. According to a report by SBI’s Economic Research Department, deposits with all scheduled commercial banks (ASCBs) have grown 9.9 percent in FY16, the lowest in more than five decades. According to SBI Chief Economic Adviser Soumya Kani Ghosh, a key reason for this could be that lower inflation is giving people the confidence to spend more than when inflation was high.


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