Indian banks cross milestone of Rs. 150 trillion deposits

Banks in India have crossed the milestone of Rs. 150 trillion in deposits, as inflows continue at a staggering pace.Deposits had previously touched the Rs. 100-trillion mark in September, 2016.

Data released by RBI showed that theOutstanding bank deposits stood at Rs. 151.13 trillion as on March, 26, 2021, the last fortnight of the financial year.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 to Rs. 108.9 trillion.

The unebbing growth in deposits and sagging credit growth have continued at least for the past one year. Industry experts urged 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, according to the reports, 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.

Pointing out credit and deposit growth trends in Q3 Care Ratings said, “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.”