#Bankable | On the latest episode, #AxisBank's Rajiv Anand explains why liabilities are still an unresolved challenge.
Watch whole episode: https://bit.ly/3RMs9uy
Watch whole episode: https://bit.ly/3RMs9uy
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TVTranscript
00:00 You said over the last 12 to 18 months liabilities have been a bit of a challenge.
00:04 When this problem started at some point last year, when the rates started turning
00:10 and then everybody was like, okay, now liabilities, pricing has to change
00:13 and people have to retain the deposit base that they have and continue to grow.
00:18 Why has it taken 18 months and why is it still a challenge is my point, is my question.
00:26 I think the pool of money by definition, I mean you are in a tighter liquidity condition.
00:31 Remember that through the cycle, through COVID, we have seen rates go up and down
00:37 by approximately 250 basis points.
00:40 On a post-COVID basis, we have seen a situation where RBI has hiked rates,
00:48 RBI has hiked CRR, RBI has sold dollars.
00:53 And so therefore, that is the one piece, the only way that money goes out
00:58 or into the system is through those RBI mechanisms.
01:01 And RBI by definition has chosen to keep liquidity tight at this point in time.
01:06 And therefore, you have seen that one-year deposit rates have gone to somewhere
01:12 between 7.5 to 8% depending upon which bank you are talking to.
01:19 And therefore, relative to the 3.5% that you are seeing on savings account,
01:24 you are able to get 7.5% on a one-year deposit.
01:29 And so therefore, what I call the cost of laziness is now 400 basis points.
01:34 Remember that the savings account is a transaction account.
01:37 I mean this is what I pay my SIPs through, my EMIs through, my bills through, etc.
01:42 Under normal circumstances, I will sort of let the money lie there.
01:47 But if I now find that I have slightly more money,
01:51 let's say usually I have 1 lakh in the account,
01:54 but now I have 2 lakhs because I have got a bonus or I have saved some money.
01:59 Under normal circumstances, you will let it remain.
02:02 But where I can move, where I can get 7.5%,
02:06 that extra 1 lakh I will now put into term deposits,
02:09 which is really what is happening.
02:11 But remember that interest rates are cyclical.
02:14 It's not as if we have not seen this movie play out before as well.
02:18 I think we are already beginning to see the first signs of central banks talking about cutting rates.
02:25 And I think that cycle will come to India perhaps over the next 6 to 12 months.
02:32 And then this will start to adjust itself.
02:36 And I think this is, if you look at India over a 20-year period,
02:42 we have never had a situation where deposits has been a concern.
02:44 I mean, there's always been lead lags, etc.
02:47 But deposit growth has traditionally been fairly strong for it to support asset growth.
02:53 And I do believe that this will adjust itself over the next 6 to 12 months.
02:57 [Music]
03:01 [BLANK_AUDIO]