Banks in India Cross ₹150 Trillion Milestone in Deposits

MUMBAI: Banks in India have crossed the milestone of ₹150 trillion in deposits, as inflows continue at a staggering pace.

Deposits had touched the ₹100-trillion mark in September 2016 and had crossed ₹50 trillion in February 2011.

Outstanding bank deposits stood at ₹151.13 trillion as on 26 March, the last fortnight of the financial year, showed data released by the Reserve Bank of India (RBI). This translates into a growth of 11.3% from the same period last year. In contrast, non-food credit grew at a sluggish pace of 5.5% year-on-year (y-o-y) to ₹108.9 trillion.

To be sure, the unebbing growth in deposits and sagging credit growth have continued at least for the past one year. Industry experts said that the inflow in deposits could be because investors are risk averse and want a certain stable return from their savings. This was despite the fact that except in a couple of state-owned banks, deposit rates have not been hiked in the recent past. In fact, Mint reported on 2 April that after two months of positive but near-zero returns in December and January, the inflation-adjusted return stood at -0.03% in February for such deposits—considered one of the most popular modes of savings for most Indians.

“The increase in overall deposits can be owing to continuous outflows witnessed in equity mutual fund coupled with lower inflows in debt mutual fund during the quarter under review, indicative of risk aversion by investors which could support the rise in bank deposits,” Care Ratings said in a note on 8 April, pointing out credit and deposit growth trends in Q3.

Meanwhile, some private banks have reported their business numbers recently, showcasing strong deposit growth. India’s largest private sector lender HDFC Bank said its deposit base rose to about ₹13.35 trillion as on 31 March, registering a growth of around 16.3% y-o-y. Federal Bank reported provisional total deposits of ₹1.72 trillion as on 31 March, up 13% over the same period last year. IndusInd Bank also reported a strong deposit growth of 27% y-o-y to ₹2.56 trillion at the end of the March quarter of FY21.

Source: The Mint