One may assume that rising interest rates making loans costlier can bring down credit demand, but a festive season in India defied that rationale, and people borrowing more increased pressure on banks trying to maintain liquidity in the face of credit growth. This means that banks now have a high amount of outstanding loans and a demand for more, which is disproportionately more than the funds deposited with them. To tackle this, banks are offering higher interests on fixed deposit schemes promising hefty returns, and Canara Bank is out on the streets to outsell the competition.
Taking shout outs beyond social media
In a video going viral on social media, employees of Canara Bank can be seen selling their 666-day fixed deposit scheme by shouting out its benefits from a microphone. Just like hawkers, two other representatives can be seen going to shops in the streets, distributing flyers with details of the scheme. This shows just how much banks need liquidity, which is a cash pile in their lockers, to balance things out as appetite for credit grows among customers.
All banks line up for customers with FD schemes
In line with other major banks such as SBI, ICICI and HDFC, Canara bank has also raised its interest schemes on FDs to 7 per cent for all consumers depositing less than Rs 2 crore and 7.5 per cent for senior citizens. This is a Diwali gift for India, where more than 90 per cent households prefer investing in a safe instrument such as a fixed deposit, as it will help them reap higher payouts on maturity. Canara Bank has posted an 89 per cent growth in profits for the July-September quarter, as compared to the same period last year, but needs liquidity nevertheless.
There wasn’t any independent verification of the video clip viral on Twitter, but the people in it can be heard speaking of Canara Bank’s 666 scheme, which indicates that the Bank has turned to old-school word of mouth marketing.
