Household savings are increasingly being diverted from traditional bank deposits to mutual funds, impacting banks' liquidity, says RBI Governor Shaktikanta Das.
This trend poses a challenge for banks as mutual funds offer higher returns, attracting more investors. The shift is affecting the availability of funds for banks, potentially influencing their ability to lend. The RBI is monitoring this trend closely to ensure it doesn't adversely impact the banking sector's stability. As more households seek better returns, banks might need to reconsider their strategies to retain and attract deposits.