Overall Deposit Growth In FY24 To Grow Over 11% YoY: SBI
The State Bank of India (SBI) on Thursday in a report said that India's overall deposit growth in the financial year (FY) 2024 is likely to grow more than 11 per cent year-on-year (YoY).
In its ecowrap report, the bank said, "This will effectively imply that the spate of deposit rate hikes could be a thing of the past."
The report stated that the liquidity surplus in the system has again increased with the net liquidity adjustment facility (LAF) absorption at Rs 2.2 lakh crore as on 07 June from an average of Rs 1.0 lakh crore from April to May 2023.
The government surplus cash balances have also started declining from the third week of May. Even the deposit of Rs 2,000 notes in banks has added to the liquidity.
Around 85 per cent of the Rs 2000 notes are deposited in bank accounts and not exchanged for smaller denominations. "Thus, bank deposits are likely to increase by at least Rs 2 lakh crore assuming some of the notes would already be with banks in currency chests," SBI said.
Also, the Reserve Bank of India's (RBI's) monetary policy committee (MPC) on Thursday decided to keep the policy repo rate unchanged without committing to a pivot. Thus, the current pause still signals a tightening stance as projected inflation continues to be above the tolerance band of RBI.
From this perspective, the current policy remains a non-event, largely on expected lines, the report mentioned.
The outlook on the global economy is clouded by sideways movements in most of the indicators even when moderating inflation, tighter financial conditions, banking sector stress, and lingering geopolitical conflicts persist.
It stated that weak external demand owing to the slowdown in advanced economies, elevated debt levels and geo-economics disintegration amidst tighter external financial conditions pose risks to growth prospects.
"Overall, the RBI policy statement is cautious and pragmatic and is clearly aimed at managing the expectation build-up of a rate cut not any time soon. The emphasis on four per cent is to clearly anchor the market expectations for the future. While we rule out a rate cut any time soon, we might be reminded that rate cuts in the past have happened over the cycle," it added.
