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Bank’s term deposits growth soars to five years high
October 03, 2023
With interest rates on the boil, customers are rushing to earn higher returns on fixed deposits. As a result, the term deposits of banks have surged 17.4% in the first quarter of the current financial year, making it the highest quarterly growth in the past five years. The highest growth rate before this in the past five years was in the first quarter of 2020-21 when it stood at 9%.
Terms deposits rose ₹16 trillion to reach ₹108 trillion as of June 30, 2023 from ₹92 trillion on June 30 previous year, according to the Reserve Bank of India (RBI) and Care Ratings data.
Customers rushed to park their money in fixed deposits after banks raised interest rates amid rising inflation and to mobilise funds to meet strong credit demand.
“With increase in the repo rate, the options for depositors have increased. In the bond and money market, rates have gone up. Rates which were around 3.5% and 4.5%, have now gone up to 6.5% and 7%. Even the one-year paper is also at 7 percent. With rates going up in the system, banks are forced to offer higher yields to depositors,” said Sanjay Agarwal, Senior Director, Care Ratings.
Total deposits, which include savings, current account and term deposits, grew by 12.6% to reach ₹185.3 trillion as of June 30 this year. Savings deposits stood at ₹59.7 trillion while current account deposits were at ₹17.58 trillion at the end of June this year.
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