A beginning has been made in innovating on deposit side. We have seen some deposit products linked to insurance being introduced. However more needs to be done.Competition in the Indian banking sector is quite intense. Field level bankers can vouch for this from anecdotal and personal experience. The same inference can be drawn if one studies the nature and quantum of liquidity surplus in the domestic financial system.

The wholesale financial markets in India have been characterized by large liquidity surpluses in recent times. This level of liquidity has been sustained over a period of time. It indicates the absence of fund deployment opportunities, which can absorb those surpluses, to certain extent. In an environment of sparse business opportunities, competition for the existing business will naturally be severe.

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