Banks are facing severe competition from mutual funds (MFs) in mobilising funds from the public. The growth in assets under management (AUM) of mutual funds was higher at 12.6 per cent during the quarter ended June 2023 while banks reported a growth of 6.2 per cent in deposits when compared with March 2023 data.
Bank deposits grew by Rs 11.16 lakh crore to Rs 191.6 lakh crore during the quarter ended June 2023. Of this, time deposits (fixed deposits) showed a growth of just 5.3 per cent to Rs 167.11 lakh crore despite the withdrawal of Rs 2,000 notes and the tax liability on debt funds. Banks also hiked interest rates on deposits following the rise in Repo rate by the Reserve Bank of India, giving more returns to depositors. Banks Like HDFC offer 7.10 per cent on deposits for a tenure of 15 months.
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