• Notification Date: 20-03-2025
• Notification No: N/A

Household Savings Shifted into Markets Could Have Perils, Says Finance Ministry

The Finance Ministry has issued a warning that domestic savings shifting away from traditional bank deposits to market-based financial instruments in the quest for higher yields could expose the families to severe monetary risks. The ministry indicated that such a shift could lead to money loss in the event of corrections or market volatility due to inadequate risk assessment and lacking financial literacy.

A reduction in household deposits would also create liquidity issues for banks, increasing their cost of funds and indirectly borrowing costs. The ministry highlighted the need to take proactive measures to address liquidity challenges and acquire more customers, especially in underdeveloped areas, by improving the efficiency of operations with the assistance of technology.

On insurance FDI, the ministry had concerns about repatriation of profits, reduced decision-making power for domestic companies, and job security issues due to potential automation. Domestic interests must be protected and balanced growth promoted.

The report also noted a 50% rise in customer complaints under the RBI’s Integrated Ombudsman Scheme over the last two years, highlighting the need for stronger grievance redressal mechanisms. Regarding Jan Dhan accounts, the ministry emphasized the importance of monitoring to prevent fraud and inactivity through regular audits and verification.

The administration seeks to find a balance between the growth of the market and economic security for families.