The Indian banking sector has witnessed robust growth in the second half of FY24, driven by significant expansion in credit and deposit rates, according to a recent report from SBI Research. The growth is attributed to improved economic activities, with bank credit increasing by 20.2% in FY24, up from 15.0% in the previous fiscal year. Similarly, overall bank deposits saw a growth of 13.5%, a substantial rise from 9.6% in FY23.
The report highlights that PSBs have imbibed the competitive spirit in true sense, offering optimal rates to discerning depositors as they galvanize to meet the surging credit demands from economy.
A palpable shift in depositors’ behaviors has been the inclination to capitalize on interest rate differentials between core and term deposits, with the incremental share of TD increasing to 93% and CASA share declining to 7% in FY24.
Special focus on senior citizens’ deposits
Senior citizens, in particular, have benefited greatly from the increased deposit rates and targeted financial products such as the WE-CARE scheme offered by SBI and government-backed savings instruments like the Senior Citizens Savings Scheme (SCSS) and Mahila Samman Savings Certificate. These initiatives have significantly bolstered term deposit accretion from this demographic group.
According to SBI Research’s estimates, there are currently about 74 million term deposit accounts held by senior citizens across India, containing a total of Rs 34 lakh crores. Remarkably, nearly all these accounts (approximately 73 million) involve deposits of up to Rs 15 lakh. Based on an assumed interest rate of 7.5%, these deposits generate an estimated Rs 2.6 lakh crores in interest annually for senior citizens.
Comparative data from 2018 indicates a dramatic increase over the past six years: an 81% rise in the number of senior citizen deposit accounts and a 143% increase in the deposited amounts.
