Secondly, competition from NSS instruments offering a relatively higher rate of return has put increasing pressure on banks’ deposit generation capacity. Since the beginning of FY09, NSS instruments have seen a net inflow of Rs 206.7 billion, as compared to Rs. 86.6 billion in FY08.
On one hand this augurs well in substantiating financial savings and meets the government’s objective of raising funds for deficit financing from non‐bank sources. However it does also imply that banks need to make concrete efforts to ensure sustained  BIS Review 120/2009  1  deposit growth by tapping the unbanked market, increasing financial penetration and facilitating the process of financial intermediation.