The weak public sector banks (PSBs) have been discouraging term deposits because of lower capital in their balance sheet, according to market experts. There are close to a dozen banks that are either part of the Reserve Bank of India's (RBI) prompt corrective action (PCA) plan or have just come out of it.
These weak banks have higher non-performing assets (NPAs), falling profitability and lower capital levels in the books. The negative growth numbers under the term deposits are visible in some of the banks.
The weak PSBs, which saw negative growth in their term deposit growth in the just concluded fiscal 2018-19, are Allahabad Bank, Corporation Bank and IDBI Bank.
The IDBI Bank, where LIC has taken a majority stake, has seen an 8 per cent fall in its term deposits from Rs 1,55,830 crore in 2017-2018 to Rs 1,41,760 crore in 2018-2019. Allahabad Bank saw its term deposits fall by 6 per cent from Rs 1,15,185 crore to Rs 1,08,264 crore in the same period. Mangalore-based Corporation Bank has also seen a de-growth of 2.27 per cent from Rs 1,29,193 crore to Rs 1,26,261 crore.
However, the savings and current account deposits, which are low cost, have remained a focus area for the banks.
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