Growth of Bank Deposits and Its Determinants: A Pragmatic Study on Commercial Banks

Commercial banks are highly sensitive organizations open to public scrutiny. As such, they must continuously ensure their profitability, which is essential for their growth and viability as also for infusing public confidence. Thus, banks have assumed greater responsibilities in mobilizing domestic resources for financing the priorities of the economy. Resource mobilization is an integral part of banking activity. Bank deposits have certain peculiar features which combine the cannons of liquidity, profitability and security. Further, the main objective of bank nationalization is tapping of potential savings and marshalling them for strategic uses for productive purposes. To an investor, deposits are the most secure and liquid financial assets available, which can accelerate banks lending to various sectors. Deposit mobilization is the most important function of commercial banks since their successful functioning depends on the extent of funds mobilized. The government has directed banks from time to time to make all possible efforts to mobilize new deposits, which can only expedite the pace of lending activities. The present paper is an attempt to evaluate the growth of deposit mobilization of banks and its determinants in the Barak Valley region of Assam in the Indian context. For this purpose, a study, based on statistical and financial tools, covering the period 1997 to 2007, has been conducted on 16 commercial banks operating in the region.