The Reserve Bank of India’s (RBI) latest data reveals that term deposits, offering higher returns, have grown significantly, outpacing the growth of current account and savings account (CASA) deposits. As of September 2024, term deposits comprised 61.4% of total deposits, a notable rise from 59.8% in September 2023, according to the RBI’s Quarterly ‘Basic Statistical Return’ (BSR) on Deposits.
Metropolitan Branches Dominate Deposit Growth
A significant portion—66.5%—of incremental deposits during the second quarter came from metropolitan branches, which hold 54.7% of the total deposit share. Individual depositors contributed 51.4% of total deposits, with women accounting for nearly 40% of these individual deposits.
Public sector banks saw year-on-year deposit growth improve to 9% in September 2024, up from 8.1% in June 2024.
Credit Growth Slows but Corporate Lending Rises
The quarterly BSR report on ‘Outstanding Credit’ highlighted a moderation in overall bank credit growth to 12.6% in September 2024, down from 15.3% in March 2024 (excluding merger effects). Metropolitan branches, which account for 60.6% of total loans, reported slower growth at 11.6%.
Key loan segments showed varied growth rates:
- Agriculture loans: 11.5%
- Industry loans: 23.7%
- Housing loans: 16.5%
- Personal loans (non-housing): 14.9%
Notably, credit to the private corporate sector outpaced the overall credit growth, reaching 16.5% year-on-year. Working capital loans also gained momentum, growing at 15.3% compared to 14.1% a year ago.
Female Borrowers See Steady Loan Growth
The share of loans held by female borrowers has been steadily increasing, standing at 23.6% in September 2024. Public sector banks and private sector banks accounted for 53.2% and 41.8% of total loans, respectively, highlighting their pivotal role in credit distribution.
Implications of Deposit and Credit Trends
The growth in term deposits indicates a shift in depositor preferences towards higher returns amid evolving economic conditions. However, the moderation in credit growth, particularly in metropolitan regions, reflects broader market dynamics, including cautious lending practices and changing demand patterns across sectors.
The data underscores the changing landscape of India’s banking sector, with term deposits gaining traction and credit growth witnessing a sectoral shift toward corporate and working capital needs. This evolving trend will likely shape banking strategies in the coming quarters.