Amid the worst deposit crunch in two decades, RBI urges banks to adjust to changes in how people save | Mint

India’s banking sector is facing a significant deposit crunch, with a widening gap between credit and deposit growth. The Reserve Bank of India (RBI) has highlighted structural liquidity issues, with deposit growth lagging behind credit expansion. This imbalance is exacerbated by a low savings rate and high credit demand. Banks are increasingly relying on costly sources of funds like bulk deposits and borrowings from other banks. The situation underscores the need for improved savings and investment strategies to stabilize the liquidity situation. Addressing this issue is crucial for sustaining economic growth and maintaining financial stability.