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All scheduled commercial banks saw a decrease in current account deposits

Published on February 14, 2024
Current Context: The current account (CA) deposits of all scheduled commercial banks have indeed seen a decrease.
All scheduled commercial banks saw a decrease in current account deposits
  • According to the RBI’s Report on Trend and Progress of Banking in India, CA deposits declined to 10.13% of their overall deposits in 2023 from 10.43% in 2022.
  • This decrease is largely attributed to the government’s adoption of the JIT (just-in-time) principle for the release of funds.
  • This principle, applied to all payments including centrally sponsored schemes, has improved the government’s efficiency in managing funds and reduced the float available to banks.
  • The Chairman of the State Bank of India (SBI), Dinesh Kumar Khara, noted that the float available in the current account has shrunk due to the government adopting the JIT system for the release of funds and cash management.
  • However, SBI has diversified its options in terms of raising current account deposits.

Question:

Q.1 What principle did the government adopt that resulted in a decrease in CA deposits?
a. First-In-First-Out (FIFO)
b. Last-In-First-Out (LIFO)
c. Just-In-Time (JIT)
d. Economic Order Quantity (EOQ)
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