Banks really don't need your deposits.

 

 

 

According to a report in the press, IDFC First Bank's report reads like this;

 

Total Deposits: 2,18,026 Crores

Total Loans: 2,22,613 Crores

 

That shows that IDFC Bank has given loans more than the total sum of deposits its holds.

 

Does that make you wonder how come this has happened or allowed to happen?

 

Well, here is the secret.

 

Any Bank, which has a banking license, does not actually need your money to give loans. Once it has a license, it can borrow from RBI (who is the lender of the last resort).

 

RBI can create money out of thin air. Like RBI did from 2016 to 2023. On 30th December 2016 the total money in the system was 16 Lakh Crores. On 30th December 2024, that became 35 Lakh Crores.

 

RBI is owned by Government of India.

 

RBI gives money to banks as and when they require funds and earns interest on this money, created out of thin air.

 

RBI last year gave a dividend of 2,10,000 Crores to Government of India. All earned out of money created out of thin air.

 

RBI is Government's ATM.

 

Then why do banks take deposits?

 

Banks take deposits because deposits are cheaper than borrowing from RBI. Savings bank rates are as low as 2.7% (SBI).

 

Money lying in current account (where minimum balances are anywhere between 10,000 to 50,000) are interest free.

 

 

So, if everyone withdrew their money from IDFC First Bank, RBI will give the bank all the money they want and prevent the bank from failing!