Share of term deposits in banks’ total deposits up at 60.3% in Dec 2023:RBI

The share of term deposits in scheduled commercial banks (SCBs) total deposits increased to 60.3 per cent in December 2023 from 57.2 per cent in March 2023, according to RBI’s quarterly data.

Rising return on term deposits (TDs) is driving the compositional shift in deposits of SCBs, the central bank said.

The weighted average domestic term deposit rate (WADTDR) on fresh and outstanding deposits increased by 246 basis points (bps) and 180 bps, respectively, during May 2022 to December 2023 period, per RBI’s latest monthly bulletin. Hundred basis points equal a percentage point.

Interest rates on TDs of more than one year duration ranged from 6 per cent to 7.25 per cent as of December-end 2023. The lagged effect of pass through of policy rate increases into deposit and certificates of deposit rates has exerted pressure on banks net interest margins, the bulletin said.

Depositors are making the most of high deposit rates. On an incremental basis, TDs accounted for nearly 97.6 per cent of the total deposits during April-December 2023 and the share of current account and savings account (CASA) deposits went down, RBI’s quarterly Basic Statistical Return (BSR) data for December, 2023 show.