Public-sector lender Dena Bank is shredding its fixed deposits (FDs) due to the lack of credit growth, the bank’s Chairman and Managing Director, Ashwani Kumar, said.
“There are three components of deposits — current, savings and fixed. Savings bank growth of Dena Bank is around 12%, and we are very happy with that. The Casa Ratio of the bank is doing really very well. In terms of FD bulk, we have shred it in a big way and also high cost deposits. The credit growth is not there, so there is no point in taking high cost deposits,” Kumar told DH.
Kumar blamed the lack of demand from the industry as the factor behind the lack of credit growth.
“Demand is coming from the retail sector. There is big demand in the housing sector, and also in the agriculture sector. But they are all small-ticket size,” he added.
He also opined that increasing demand in the housing sector will not cause repetition of the ‘2008 Bubble Burst’ in India.
“What happened in the US was that prices were rising on a daily basis, which is not the case in India. So it was basically investor-driven. Also, the US doesn’t have margin system. We have an official margin system here. So, it is an entirely different case,” Kumar added.
On the growing NPAs, he blamed certain court decisions and policy issues as its root cause.