{"id":75762,"date":"2026-06-03T20:41:34","date_gmt":"2026-06-03T15:11:34","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=75762"},"modified":"2026-06-03T20:43:21","modified_gmt":"2026-06-03T15:13:21","slug":"deposit-landscape-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/03-06-2026\/deposit-landscape-india","title":{"rendered":"Shift in India&#8217;s Deposit Landscape"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to the latest report of the Reserve Bank of India, Indian depositors are increasingly shifting their funds from low-interest savings accounts to higher-yield fixed deposits (FDs).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Trends Highlighted by RBI<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Declining Share of Savings Deposits:<\/strong> Savings deposits accounted for only 28.7% of aggregate bank deposits in March 2026, down significantly from 34.6% in March 2022.\n<ul class=\"wp-block-list\">\n<li>Demand deposits (savings and current accounts) stood at \u20b931.65 lakh crore as of May 2026.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Rising Popularity of Fixed Deposits: <\/strong>Term deposits increased their share from 55.2% to 61.6% over four years and reached \u20b9225.23 lakh crore by May 2026.\n<ul class=\"wp-block-list\">\n<li>Depositors are increasingly locking funds for longer durations to secure higher returns.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Preference for Medium-Term Deposits:<\/strong> The share of deposits with maturity between 1 and 3 years increased from 50.4% in 2022 to 69.8% in 2026.\n<ul class=\"wp-block-list\">\n<li>Deposits with maturity below one year fell from 16.7% to 8.8%.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Dominance of Large Depositors: <\/strong>Deposits of \u20b91 crore and above accounted for 46.3% of total term deposits as of March 2026.<\/li>\n\n\n\n<li><strong>Household Savings Behaviour:<\/strong> Household savings continue to provide the foundation of India&#8217;s banking deposit base, accounting for <strong>59.3% <\/strong>of total bank deposits at the end of March 2026.<\/li>\n\n\n\n<li><strong>Diversification Towards Other Financial Assets:<\/strong> Many households are increasingly investing in mutual funds, equities, and other market-linked instruments to seek higher returns.\n<ul class=\"wp-block-list\">\n<li>The growing diversification of savings reflects increasing financial awareness and participation in capital markets.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Are Indians Preferring Fixed Deposits?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Low Interest Rates on Savings Accounts:<\/strong> Most major banks offer only <strong>2.5\u20133% interest<\/strong> on savings accounts. In contrast, one- and two-year FDs offer around <strong>6.25\u20136.45% returns.<\/strong><\/li>\n\n\n\n<li><strong>Negative Real Returns on Savings Deposits:<\/strong> When savings account interest rates remain below inflation, the real value of money declines.\n<ul class=\"wp-block-list\">\n<li>With retail inflation around <strong>3.48%, <\/strong>a savings account yielding <strong>2.5% <\/strong>generates a negative real return.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Banking Sector Priorities:<\/strong> Banks have been offering <strong>attractive FD rates <\/strong>to mobilize resources and fund credit growth, causing depositors to increasingly lock in medium-term funds (one to three years) to secure higher yields.<\/li>\n\n\n\n<li><strong>Easy Accessibility:<\/strong> With the rise of net banking and mobile applications, anyone can open an FD with just a few clicks.<\/li>\n\n\n\n<li><strong>Deposit Insurance:<\/strong> FDs are covered by the <strong>DICGC (Deposit Insurance and Credit Guarantee Corporation)<\/strong>, which insures deposits up to <strong>\u20b95 lakhs<\/strong> per depositor per bank, adding a layer of security.<\/li>\n\n\n\n<li><strong>Convenient Liquidity &amp; Loans: <\/strong>Investors can opt for tenures ranging from just <strong>7 days to 10 years.<\/strong>\n<ul class=\"wp-block-list\">\n<li>If immediate cash is required, investors can break the FD or take a loan\/overdraft against the FD without losing all the benefits.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Implications for the Indian Economy<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Positive Implications:<\/strong> Higher fixed deposit mobilisation strengthens the resource base available for bank lending.\n<ul class=\"wp-block-list\">\n<li><strong>Greater household participation <\/strong>in financial savings contributes to financial sector deepening.<\/li>\n\n\n\n<li>The shift towards interest-bearing instruments promotes<strong> more efficient allocation of savings<\/strong> within the economy.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Emerging Concerns: <\/strong>Higher funding costs may <strong>exert pressure on banks&#8217; profitability<\/strong> and lending rates.\n<ul class=\"wp-block-list\">\n<li>The <strong>declining share of Regional Rural Banks<\/strong> in deposit mobilisation indicates increasing concentration of deposits in larger commercial banks.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Policymakers should encourage greater diversification of household savings across deposits, pensions, insurance, and capital market instruments to strengthen long-term financial security.<\/li>\n\n\n\n<li>Banks should develop flexible deposit products that combine higher returns with easier access to funds during emergencies.<\/li>\n\n\n\n<li>The growing shift towards fixed deposits should be complemented by deeper financial sector reforms that channel household savings into productive investments for economic growth.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The shift from savings accounts to fixed deposits reflects households&#8217; preference for higher and more stable returns amid low savings account interest rates and inflation concerns.\u00a0<\/li>\n\n\n\n<li>While market-linked SIPs are gaining popularity, the safety, predictability, and assured returns offered by fixed deposits continue to make them a cornerstone of Indian saving habits.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/rbi-bank-deposits-savers-shift-to-fixed-deposits-10719804\/lite\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> According to the latest report of the Reserve Bank of India, Indian depositors are increasingly shifting their funds from low-interest savings accounts to higher-yield fixed deposits (FDs). <\/li>\n<p><\/p>\n<p><strong> Key Trends Highlighted by RBI <\/strong><\/p>\n<li class=\"ms-5\"> Declining Share of Savings Deposits: Savings deposits accounted for only 28.7% of aggregate bank deposits in March 2026, down significantly from 34.6% in March 2022. <\/li>\n<li class=\"ms-5\"> Demand deposits (savings and current accounts) stood at \u20b931.65 lakh crore as of May 2026. <\/li>\n<li class=\"ms-5\"> Rising Popularity of Fixed Deposits: Term deposits increased their share from 55.2% to 61.6% over four years and reached \u20b9225.23 lakh crore by May 2026. <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/03-06-2026\/deposit-landscape-india \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-75762","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75762","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=75762"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75762\/revisions"}],"predecessor-version":[{"id":75766,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/75762\/revisions\/75766"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=75762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=75762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=75762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}