Bank Deposits in the Indian Economy-A Comment

A Comment G Narayanan August 1967), V G Pendharkar does not consider the impact of expansion of deposits with the non-banking sector on the growth of bank deposits. He does not see any possibility of growth of bank deposits being adversely affected since he holds that deposits initially diverted from banks to non-banks would find their way back to the banking system and remain there, Actually, given the general scarcity of loanable funds and Reserve Bank restrictions on lending by commercial banks, there is a natural tendency for interest rates to rise in the uncontrolled sector and this does cut into the expansion of bank deposits.