Term Deposits Outpace CASA Growth In September

In a notable shift in the banking sector, term deposits have outpaced the growth of CASA (Current Account and Savings Account) deposits, with their share in total deposits rising to 61.4% in September 2024, up from 59.8% a year earlier, according to the latest data released by the Reserve Bank of India (RBI)

Shift to Higher-Interest Term Deposits Amid Tightened Monetary Policy

The RBI’s Quarterly Basic Statistical Return (BSR) for September 2024 reveals that a significant portion of deposits has moved into higher interest rate buckets. This trend comes in the wake of the recent monetary policy tightening cycle. Term deposits offering over 7% interest have seen a substantial increase, rising to 68.8% in September 2024 from 54.7% a year ago.

Bank Deposits Growth Remains Strong

The growth in total bank deposits stood at 11.7% year-on-year in September 2024, a figure similar to the previous quarter. Notably, deposits from all population groups—rural, semi-urban, urban, and metropolitan—recorded double-digit annual growth, signaling robust demand across regions.

Metropolitan Branches Lead Deposit Growth

Metropolitan branches continue to dominate the deposit landscape, contributing 66.5% of the total incremental deposits in Q2 2024-25. These branches hold a 54.7% share in total bank deposits. The RBI also highlighted that individuals hold 51.4% of all deposits, with female depositors representing nearly 40% of individual deposits.

Public Sector Banks Show Moderate Growth

Deposits in public sector banks grew at a more modest pace of 9% year-on-year in September 2024, a slight increase from 8.1% in June 2024. However, this growth remains significantly lower than that of other banking groups, which saw growth rates above 15%.

Senior Citizens and Their Growing Share in Bank Deposits

The share of senior citizens’ deposits has also increased, rising to 20.1% in September 2024, up from 19.7% the previous year. This growth reflects the increasing reliance of senior citizens on stable and higher-returning deposits.

Credit Growth Moderates, But Corporate Sector Lending Surges

According to the RBI’s report on Outstanding Credit of Scheduled Commercial Banks, bank credit growth moderated to 12.6% year-on-year in September 2024, down from 15.3% in March 2024. Despite the slowdown, credit to the private corporate sector surged by 16.5% year-on-year, outpacing overall credit growth.

Metropolitan branches, which account for 60.6% of total loans, recorded a slower credit growth rate of 11.6%, reflecting a more cautious lending environment. However, certain sectors, including agriculture, industry, housing, and personal loans, saw notable growth.

Female Borrowers’ Share in Loans Increases

The share of female borrowers in total loans has been gradually rising. By September 2024, it reached 23.6% of loans to individuals, further indicating the positive trend towards financial inclusion for women.

Banking Sector Credit Growth by Bank Group

In terms of loan growth, public sector banks and private sector banks continued to hold significant shares in credit distribution, accounting for 53.2% and 41.8%, respectively, in September 2024. Public sector banks saw a 13% year-on-year increase in credit, while private sector banks recorded an 11.9% rise.

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