FM Nirmala Sitharaman urges banks to focus on 'core banking' at post-Budget meeting

Union Finance Minister Nirmala Sitharaman urged banks to focus on ‘core banking’ during a meeting with members of the Reserve Bank of India’s Central Board of Directors on August 10.  
“Both RBI and the government want banks to focus on core banking,” the Union finance minister said, underscoring the need for banks to concentrate on their fundamental operations. 
“The government and RBI have been telling banks continuously to focus on core banking, including deposit collection and lending money,” she said.  
In order to overcome the mismatch between deposits and lending, Sitharaman asked banks to come up with “innovative and attractive” deposit schemes to mobilise funds from the people. 
Addressing the meeting RBI Governor Shaktikanta Das said that banks have the autonomy to set their own interest rates, as both deposit and lending rates are deregulated.  
“Interest rates on deposits, lending are deregulated,” Das said, further adding that “banks are free to decide rates”.  
On August 8, the RBI Governor had expressed concern of deposit-lending mismatch in the banking sector while unveiling the bi-monthly monetary policy. 
He had said that banks were taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand. 
“This may potentially expose the banking system to structural liquidity issues,” he warned. Banks may, therefore, focus more on mobilisation of household financial savings through innovative products and service offerings and by leveraging fully on their vast branch network, the RBI Governor had said.