Bankers and Mutual Funds Clash Over Deposit Growth at FIBAC 2024

At the FIBAC 2024 conference, Indian Banks' Association and mutual funds clashed over the impact of easier regulations on retail deposit shifts. While mutual funds argue that their higher returns attract savers, banks blame these shifts for slower deposit growth. Experts call for regulatory involvement to address these challenges.

The FIBAC 2024 conference saw a heated debate between the Indian Banks' Association (IBA) and mutual fund representatives over the dynamics of retail deposit shifts. The IBA argued that easier regulations for mutual funds are shifting retail deposits away from banks.

M V Rao, IBA chairman, highlighted that mutual funds' higher returns are a result of lenient regulations, which do not apply to banks. Contrarily, Kotak Mahindra Bank's CEO Nilesh Shah questioned the blame placed on mutual funds for slower deposit growth, suggesting other systemic factors at play.

Governor Shaktikanta Das and industry data support a trend where savers prefer mutual funds due to higher yields, contributing to banks' slower deposit growth. The conference underscored the need for government and regulatory involvement to ensure balanced growth in both sectors.

(With inputs from agencies.)