RBI Dy Governor Flags Banks’ Tendency to Depend on Bulk Deposits

MUMBAI: Reserve Bank of India Deputy Governor Swaminathan J on Thursday flagged rising tendency of banks to depend on bulk deposits, which attract higher cost and therefore affects margins.

Swaminathan urged banks to effectively manage their interest rate risks, and said they will have have a tough time if they depend too much on higher-priced bulk deposits.

When interest rates decline, these long-term large deposits will still have to be managed and that can lead to lower profits and lower margins, he said.