Banks shed bulk deposits for healthy net interest margins

BANKS ARE SHEDDING costly bulk deposits to protect their net interest margins (NIMs) ahead of expected interest rate cuts.

- SACHIN KUMAR

BANKS ARE SHEDDING costly bulk deposits to protect their net interest margins (NIMs) ahead of expected interest rate cuts. They are now focusing on increasing the share of retail deposits with the aim to reduce their cost of funding amid tight liquidity conditions.

"We will be mindful of how to contain bulk deposits...we are not going to go for bulk deposits or the certificate of deposits," Ashok Chandra, MD & CEO, Punjab National Bank, said after announcing the bank's third-quarter earnings. "We want to cut down on bulk deposits because it will also help (us) protect NIMs," he said.