Urban Centers Dominate Indian Bank Deposits, Private Banks Gain Ground

In a revealing report, the Reserve Bank of India highlights that despite Indian banks extending credit to numerous villages, the deposit landscape remains heavily skewed towards metropolitan areas. The latest quarterly report on bank deposits indicates that a staggering 60% of deposits in commercial banks as of September 30 hail from large cities, showcasing a significant urban bias.

Urban and metropolitan markets are responsible for a whopping 80% of term deposits, underscoring the concentrated nature of deposit mobilization. The data reveals that nearly 44% of term deposits by end-September were Rs 1 crore and above, indicating that savings are primarily generated in economically vibrant pockets.

Accenture’s Sonali Kulkarni notes, “Large Indian metro centers have traditionally contributed more to bank deposits due to their economic activity and growing disposable income.” The top 30 centers consistently contribute about 55% of deposits, while the next 100 locations are witnessing growth, driven by rising income levels and increased banking penetration.

Private banks, leveraging technological advantages, have a slightly higher deposit concentration in metropolitan markets compared to public sector banks. Reports from Kotak Mahindra Bank show that private banks gained a 2-percentage-point market share in the first half of this fiscal year. The data also highlights the steady growth of private banks in term deposits.

Accenture emphasizes the importance of mobile-first experiences, stressing that both public and private sector banks need to adopt interactive formats in local languages to connect with the younger generation across urban and rural India. This shift is crucial as the younger demographic seeks competitive interest rates and convenient digital banking interfaces.