Miscellaneous - This Day That Age   

dated June 20, 1958: Banking in India

An exceptionally large deposit expansion was the “most striking feature” of the trends in Indian banking during 1957. This is the conclusion of the Reserve Bank of India’s annual report “Trend and progress of banking in India during the year, 1957” which says that “the net deposits of scheduled banks rose during the year by Rs.245 crores to Rs.1,297 crores as against the rise of Rs.77 crores in 1956.” “Whereas in 1956 the growth in deposits fell far short of the increase in credit, deposits in 1957 rose by over thrice the increase in credit,” the report adds. Some of the important factors responsible for this were the placement by the United States authorities in India of funds representing the initial reimbursement by the Government of the cost of food grains imported into the country under the U.S. Public Law 480 and the tight import restrictions which might have induced business concerns and other bodies to seek temporary investment of their reserve and other surplus funds in the form of time deposits. The long-term factors for this deposit-expansion might have been the hardening of interest rates on fixed and savings deposits.

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