India’s financial landscape undergoing structural shift: RBI Governor Das | Finance News

The slow growth in deposits could expose the financial system to structural liquidity issues, he said at the ‘Modern BFSI Summit 2024’ organised by Financial Express newspaper in Mumbai. Regulatory actions are emerging in response to such challenges.

There has been a noticeable trend of households increasingly shifting their investments to capital markets and other financial intermediaries. The trend has led to a decline in the share of bank deposits, said Das.

He highlighted the rise in digital frauds, particularly those involving the so-called mule bank accounts. The RBI is monitoring accounts that have unusual activity at odd hours or sudden volume increases in previously inactive accounts, he said. He urged banks to enhance their monitoring systems to detect and prevent such fraudulent activities.

The increasing share of retail portfolios poses potential risks, said Das. The RBI has taken steps to mitigate these risks, focusing on delinquency levels and limits on small unsecured loans, which remain a point of concern. Excessive interest rates in microfinance loans were also flagged as another significant worry, he said.
Das acknowledged the challenge posed by climate change to economic growth. The RBI is preparing plans to tackle climate-related risks and provide climate financing. He cautioned against the risk of green washing and emphasised the need for vigilance in this area.