MUMBAI: Governor Sanjay Malhotra likened India’s increasingly evident tilt toward equities to collective participation in national growth, arguing that the latest “healthy” trend in financial savings – a lower share for bank deposits – reflected a rapidly expanding economy’s journey toward an ideal asset-class mix.
“There is certainly a shift from banking to equity, from debt to equity,” Malhotra said. “That is, on the whole, a healthy trend for any economy as it grows. There should be a good mix, and I think we are moving toward that. We should not be unduly concerned.”
RBI kept the repo rate unchanged in its latest policy review, having cumulatively reduced it by a full percentage point this year, to 5.5% from 6.5% in February.
The steep decline in policy rates has led to lowering of deposit rates, with the weighted average domestic term deposit rate (WADTR) on fresh deposits declining by 87 basis points, forcing savers to explore other avenues for higher returns.