It makes sense to focus on the sectors where the money really goes. The new pension law will help put more money into long-term savings. Then, bank deposits have been seeing slower growth even as the money going into gold has trebled from 1% of GDP to 3%.

One result is that, over the past three years (till end-August), fresh loans have equalled 90% of new deposits. That is an unsustainable ratio when the Reserve Bank of India's reserve requirements should leave banks with no more than 73% of new deposits for giving out as new loans.

Conclusion: the demand for fresh credit is outstripping the inflow of deposits that can be lent out. Read More

Jyothi Shankaran

    Jyothi’s last role was as Senior Editor with the business news channel Bloomberg TV India. He also worked as News Editor at business-standard.com, the online version of the business newspaper Business Standard. Jyothi is a chemical engineer from the Regional Engineering College, Srinagar.