SBI to launch new current accounts and savings accounts in FY24 to attract deposits

The State Bank of India (SBI) has revealed plans to introduce new variants of current accounts and savings accounts in the fiscal year 2023-24, as it seeks to reduce the gap between deposit growth and credit growth. The bank intends to launch two new variants of current accounts, one with a balance of ₹50,000 and another with a balance of ₹50 lakh. It also plans to introduce a new savings account called “Parivar” (family) account.

Buy Prime Test Series for all Banking, SSC, Insurance & other exams

Need of this move: deposit growth and credit growth:

The move comes as SBI aims to increase its customer base and attract more deposits, particularly from retail customers. The bank has identified the need to offer more attractive products and services in order to achieve this goal. By introducing new variants of current accounts and savings accounts, SBI hopes to provide greater flexibility and convenience to its customers, and to increase its market share in the Indian banking sector.

SBI’s deposit growth has lagged behind its credit growth in recent quarters. By the end of 2022, the bank’s domestic deposits had grown by 8.86% year-on-year, while domestic advances had grown by 16.91% year-on-year. The new plans are designed to help the bank boost its deposit growth and reduce the gap between deposits and advances.

SBI expects its domestic deposits and domestic advances to grow by around 12% and 16% year-on-year, respectively, in the fiscal year 2023-24. The bank also plans to enhance its digital banking platform to provide a more seamless and user-friendly experience for its customers.

SBI’s Net interest margin (NIM):

The low proportion of low-cost current account (CA) deposits in the total domestic deposits of the State Bank of India (SBI) is a challenge for the bank’s net interest margin (NIM). As of December 2022, low-cost CA deposits accounted for only 5.6% of SBI’s total domestic deposits, which stood at ₹40,48,149 crore. This is a concern for the bank because low-cost CA deposits are considered to be the cheapest source of funds for banks, as they carry little or no interest rate.