India’s banking sector is celebrating a new milestone—its deposit portfolio crossed Rs100 trillion on 30 September. Bank credit has also grown five-fold since 2006 and it has been tracking deposit growth. While deposit growth has been tardy (it dropped to a 50-year low in April), credit growth has been even worse. There have been many theories doing the rounds on why the deposit growth in the banking system has been low. Once the banks start lending more money, deposits too will grow faster, driven by the so-called money multiplier effect.

Source: Mint October 23, 2016 17:26 UTC