Page 6 - Banking Finance October 2024

BANK UPDATE

push for its reinstatement in the bank- Shaktikanta Das, who have called for Despite the differences in opinion,
ing sector during their meeting with innovative solutions to attract depos- many bankers believe that the deposit-
the Indian Banks' Association. its. The issue remains critical as house- credit mismatch is a temporary issue
hold savings shift to higher-yielding in- rather than a structural problem, and
Max Life and CSB Bank vestment products. solutions lie in innovative strategies.
Form Bancassurance Part- Debate among bankers ED Arrests Four in Rs. 25
nership over lagging deposit Crore Cyber Scam Case
Max Life and CSB Bank have an- The Enforcement Directorate (ED) has
nounced a strategic bancassurance growth arrested four individuals from
partnership, aiming to provide life in- The recent slowdown in deposit growth Bengaluru in connection with a cyber
surance solutions to over 2.5 million has sparked a debate among bankers investment scam that defrauded vic-
CSB customers. This collaboration will and regulators about the root causes tims of approximately Rs. 25 crore. The
offer savings, protection, retirement, of the divergence between deposits accused, identified as Shashi Kumar M,
and group life insurance plans through and advances. Speaking at the Fibac Sachina M, Kiran SK, and Charan Raj
CSB Bank's network, integrating Max conference, M.V. Rao, Chairman of the C, were involved in setting up compa-
Life's products into the bank's distribu- Indian Banks' Association and CEO of nies and bank accounts to launder the
tion channels. Central Bank of India, attributed lower proceeds of the crime.
returns on bank deposits to strict regu-
Sumit Madan, Chief Distribution Officer latory controls, which limit the profit- The ED initiated its investigation based
at Max Life, highlighted the able deployment of resources com- on multiple First Information Reports
partnership's significance in reaching (FIRs) filed in Faridabad, Noida, and
underserved populations and ensuring pared to mutual funds. Bathinda, where victims lost substan-
that more individuals have access to In contrast, Bank of Baroda CEO tial amounts after being lured into
life insurance. CSB Bank, one of Debadatta Chand emphasized the fraudulent stock market investments
Kerala's oldest private banks with 801 need for banks to innovate by offering through fake apps. Among the cases,
branches, sees this partnership as a bundled products along with savings a woman in Faridabad was defrauded
key step in expanding insurance acces- accounts to attract more deposits. of Rs. 7.59 crore, a businessman in
sibility and aligning with its market Chand suggested that deposits should Noida lost Rs. 9.09 crore, and a doc-
growth strategies. no longer be viewed as generic prod- tor in Bathinda lost Rs. 5.93 crore. The
ucts and that banks need to integrate arrested individuals have been re-
Deposit Growth: A Key additional services to appeal to cus- manded to ED custody for a week by a
tomers in the current market.
Challenge for Indian special court in Bengaluru. The ED's
Banks, Says Federal Bank SBI Chairman Highlights Skill Gap in Lending to
The Indian banking sector faces a sig-
nificant challenge in boosting deposit Emerging Sectors
growth, as customers increasingly turn C.S. Setty, Chairman of State Bank of India (SBI), has acknowledged that
to alternative investment products, despite years of lending experience, banks still lack the expertise to finance
according to Shalini Warrier, Head of emerging sectors like green energy and battery storage. Setty noted that
Retail Business at Federal Bank. after a surge in non-performing assets (NPAs) from corporate lending, banks
Warrier pointed out that fixed deposit have shifted focus to personal loans, due to challenges in lending to small
rates have not risen as much as cus- businesses and retail sectors.
tomers expect, pushing them towards
other investment options. Setty proposed the establishment of a center of excellence in collaboration
with multilateral development banks and multinational financial institutions
Deposit growth has lagged behind to bridge the skill gap in assessing projects in these emerging areas. He
credit demand in recent quarters, emphasized the need for domestic banks, especially large ones like SBI, to
prompting concerns from top officials, play a pivotal role in infrastructure financing while seeking global partner-
including Finance Minister Nirmala
Sitharaman and RBI Governor ships for capital and knowledge transfer.

6 | 2024 | OCTOBER | BANKING FINANCE