With rising demand for other financial products like mutual funds, insurance, commodities, Indian banks will have a tough time ahead in attracting deposits from customers, given the falling rates of interest, said a report by Indian Chamber of Commerce and KPMG, the consultancy.
The report titled 'Indian banking - the engine for sustaining India's growth agenda' said that "While a rise in consumption is a given, all savings and investments going to banks is not. Banks would have to strive hard to attract deposits in the future, as the rising segment opens to other avenues for savings and investments such as mutual funds, insurance, real estate and commodities."
However, it seems that some bankers were not agreeing to this. A senior official with a Public sector bank said banks will not be in a hurry to cut their deposit rates in the medium to long-term maturity tenures.
The report further suggested that banks will have to revisit their strategies for attracting current accounts and savings accounts and term deposits. "Most banks will need to start putting together strategic plans and identify teams to focus on deposit raising, and move from the model of servicing walk-in customers to aggressively pursuing new customers through innovative bundling, promise of better returns, higher levels of customer service and attractive rewards programmes," it said.