Bankers and investment funds argue over deposit growth at FIBAC 2024

FIBAC 2024 witnessed a heated debate between the Indian Banks’ Association (IBA) and mutual fund representatives on the dynamics of retail deposit shifting. The IBA argued that easier regulations for mutual funds were shifting retail deposits away from banks.

MV Rao, chairman of IBA, said that higher mutual fund returns were a result of lax regulations that did not apply to banks. Kotak Mahindra Bank CEO Nilesh Shah, on the other hand, questioned whether mutual funds were to blame for slower deposit growth, suggesting that other systemic factors were at play.

Governor Shaktikanta Das and industry data confirm the trend of savers preferring mutual funds due to higher returns, which is contributing to slower growth in bank deposits. The conference stressed the need for government and regulatory involvement to ensure sustainable growth in both sectors.

(Based on information from the agency.)