Banks Invest in Mutual Funds: 91% Jump in FY25
Why in the news
Banks, normally lenders, became big mutual fund investors in FY25, per the RBI Bulletin.
Key facts
| Indicator | Earlier | Latest |
|---|---|---|
| Bank MF holdings | ₹62,499 crore | ₹1.19 lakh crore (+91%) |
| Credit growth | 16.3% (FY24) | 12.1% (FY25) |
- System liquidity surplus: ₹1.5 lakh crore.
Reasons
- Weak loan demand from slower income growth and job uncertainty.
- Liquid and money market schemes gave T-bill-like returns with near-zero risk.
- Funds allowed faster deployment than lending.
Policy and savings context
- RBI turned accommodative; moderating inflation eased banks’ borrowing needs.
- Households shifted from deposits to market products; ex-Governor Shaktikanta Das said deposits still lead but their share is falling.
Exam angle
- Banks chose T-bill-heavy liquid and debt funds.
- Terms: accommodative stance, surplus liquidity.