India's Banking Landscape Shifts as Term Deposits Gain Popularity

The Reserve Bank of India's latest data reveals a slowdown in bank deposit growth, tapering off to 10.6% in the fiscal year ending March 2025 compared to a 13% uptick the year before. Despite this deceleration, the deposit base remains robust, with term deposits occupying the largest share at 59.5%.

This figure is marginally down from last year's 60%. Savings deposits decreased to 29.1% from 30.8% in the previous fiscal year, while current deposits held steady at 9.8%. The data indicates a growing trend towards term deposits, catalyzed by elevated interest rates.

The RBI reports that 68.4% of term deposits had an original maturity of one to three years as of March 2025. Additionally, the share of term deposits offering interest rates of 7% or higher soared to 72.7% from 64.2% in March 2024. Deposits worth Rs. one crore and above surged, comprising 45.1% of total term deposits. Meanwhile, households remain the primary contributors to the deposit pool, with women and senior citizens holding a 20.7% and 20.2% share, respectively. Growth is uneven across regions, with metropolitan areas leading at 11.7% and rural areas at 10.1%.

(With inputs from agencies.)