In the backdrop of tight liquidity, banks are desperate for public deposits. And bankers have now taken their campaign to the roads, literally!
Recently, a video of Canara Bank employees campaigning customers for its '666 days' fixed deposit (FD) scheme from Goregaon East, Mumbai, went viral.
In the video, a man was seen carrying a microphone, accompanied by his colleagues, visiting shops and apartments.
Employees of Canara Bank's Vishweshwar Nagar branch at Goregaon East, Mumbai, confirmed that the person is the chief manager of the branch.
In the video, the group can be seen advertising Canara Bank's ‘666 days’ FD scheme. The chief manager, carrying a microphone, shares the details of the plan, while two others move from shop to shop to distribute brochures.
Moneycontrol verified the authenticity of the video circulated on LinkedIn and microblogging platform Twitter by reaching out to the branch office.
"Not only us, but also other branches across India are doing the same ― distributing pamphlets and making announcements on microphones. But only our video went viral, thanks to media agencies. The viral video was shot on October 20," an employee of the branch office told Moneycontrol on condition of anonymity.
Why the hurry for deposits?
Look at how @canarabank selling fixed deposits in Mumbai suburbs. Tells the story of liquidity crunch on the system. Banks need more money to support rising credit growth pic.twitter.com/Mfi1Zx4DqI
— Tamal Bandyopadhyay (@TamalBandyo) October 22, 2022
The sharp expansion in credit growth in the last few months has forced most banks to increase their promotional activities to garner more funds through FDs to meet demand.
Besides Canara Bank, several other banks have also increased their advertisements of various FD schemes. But, Canara Bank is the first to be seen hitting the roads hawking the scheme.
What is '666 days' FD scheme?
The 666 days FD scheme of the state-owned lender provides a return of 7 percent per annum for general citizens and 7.5 percent for senior citizens, for a deposit lower than Rs 2 crore.
"Now get maximum returns on your investment! Presenting Canara Special Deposit Scheme that offers 7.50 percent interest by investing for 666 days," the bank said on Twitter.
An FD is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than regular savings account, until the given maturity date.
Over the last few days, the banking system has been facing a liquidity crunch due to heavy currency leakage on account of festive season and regular intervention by the Reserve Bank of India (RBI) in the foreign exchange market to keep the rupee from falling further.
Usually, in the second half of the financial year, currency leakage increases sharply, as spending goes up on account of the festival season.
Also, regular intervention by the central bank in the currency market has sharply reduced the foreign exchange reserves in the last few months.
India’s forex reserves fell $4.50 billion to a multi-year low of $528.37 billion for the week ended October 14, according to the latest data from the RBI.
Currently, liquidity in the banking system is estimated to be in deficit of Rs 62,835.70 crore, said a dealer from a state-owned bank.
Also read: Word of mouth: 'Canara Bank employees' hawk FD scheme in Mumbai suburbs, video goes viral
The state-owned lender, last week, reported an 89.5 percent year-on-year (YoY) growth in standalone profit at Rs 2,525 crore for the quarter ended September FY23, on the back of lower tax costs and healthy net interest income (NII).
The bank’s NII grew by 18.5 percent on-year to Rs 7,434 crore, compared to Rs 6,273 crore. Non-interest income grew 13 percent on-year to Rs 4,825 crore in the same period last year.
The net interest margin (NIM) of the bank stood at 2.86 percent, compared to 2.78 percent in the previous quarter and 2.77 percent in the year-ago quarter.