The RBI has expressed its worry over the increasing rate of loans in the banking system as there is an increasing proportion of bank loan to deposits. While speaking at the Kotak Mahindra Bank’s financial inclusion function in Gujarat, KC Chakrabarty, the Deputy Governor of RBI said that there is an increasing rate of bank loans when comparing to their deposit rates. He also said that if the banks fail to take steps in increasing the deposits they may not be capable to develop their loans.
He as well stressed banks, the necessity to maintain a maximum of 4 % of their deposits in the cash reserve ratio form with the RBI and another 25 % of their deposits in management bonds. This allows banks to have below 75 percent of their deposits for lending.