RBI Governor Shatikanta Das on Wednesday discussed lagging growth in deposits as compared to credit growth in his meeting with managing directors and chief executive officers of public sector and certain private banks, the RBI said in a statement.

RBI Deputy Governor M.K. Jain as well as a few senior officials of the central bank were also present in the meeting. Latest data on the RBI showed that as on Oct 21 loan growth in the banking system stood at 17.9%, close to its near 9-year-high level. Conversely, deposit growth printed at 9.5%. Most banks have reported healthy loan growth in the September quarter, and commentary by lenders suggests that loan growth is expected to remain robust for the rest of the financial year.

This, along with, the strain on the systemic liquidity, resulted in banks scrambling for deposits, and also forced them to hike deposit rates at a faster pace, analysts said. While banks have been prompt in increasing lending rates--with most fully transmitting the repo rate hikes into loans priced on external benchmarks-- they have been slow when it comes to increasing deposit rates.

In the  meeting of RBI officials with bank chiefs, other topics such as asset quality, investments in information technology infrastructure, adoption of newage technology solutions, functioning of digital banking units, were also discussed, the RBI said.

The Governor also advised the banks to remain watchful of the evolving macroeconomic situation, including global spillovers, and take mitigating measures proactively so that the potential impact on their balance sheets is minimised and financial stability risks are contained. He said that despite challenges, the banking sector remained resilient and continued to improve in various performance parameters.

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