Indian banks face massive deposit erosion
Q. Indian banks are staring at deposit erosion of what amount between Sept and Nov 2016?- Published on 17 Oct 16a. INR 1.5-2 lakh
b. INR 2-2.5 lakh
c. INR 2.5-3 lakh
d. None of the above
ANSWER: INR 1.5-2 lakh
Indian banks are staring at deposit erosion of INR 1.5-2 lakh between Sept and Nov 2016 as Foreign Currency Non Resident deposits mobilised in 2013 mature around that period
- This could result in acute liquidity shortage and possible de-growth of balance sheets
- At the deposit growth rate currently, mobilisation by banks is to the tune of INR 2.4 lakh crore deposits in three months
- To maintain the same growth, banks will need to raise INR 4 lakh crore in three months
- Liquidity impact is to be felt by banks around maturity time
- RBI is also planning liquidity support and special measures to nullify shortage
- Central Bank also has build up a long forwards position in dollars amounting to USD 21.15 billion in more than three months and up to one year segment that can be used for honouring the pay-outs
- Central Bank’s social position will be around USD 24.67 billion indicating RBI will infuse dollars to prevent exchange rate volatility
