New Delhi/IBNS: Union Finance Minister Nirmala Sitharaman on Saturday (Aug 10) urged banks to focus on ‘core banking’ and to bring in innovative products to mobilise deposits during a meeting with members of the Reserve Bank of India’s (RBI) Central Board of Directors, reports said.

Underscoring the need for banks to concentrate on their fundamental operations, Nirmala Sitharaman said, "Both RBI and the government want banks to focus on core banking.”

“The government and RBI have been telling banks continuously to focus on core banking, including deposit collection and lending money,” Sitharaman added.

The Finance Minister, in order to overcome the mismatch between deposits and lending, asked lenders to come up with “innovative and attractive” deposit schemes to mobilise funds from the people.

RBI Governor Shaktikanta Das, while addressing the meeting, said that banks have the autonomy to set their own interest rates, as both deposit and lending rates are deregulated, according to reports. 

“Interest rates on deposits, lending are deregulated,” Das said, adding that “banks free to decide rates."

Earlier on Thursday (Aug 8), the central bank's Governor had expressed concern of deposit-lending mismatch in the banking sector while unveiling the bi-monthly monetary policy, saying that banks were taking greater recourse to short-term non-retail deposits and other instruments of liability to meet the incremental credit demand.