Scheduled commercial banks’ (SCBs) term account deposits rose 17.4% y-o-y in Q1FY24 versus 8.2% in the year-ago period due to a rise in interest rates on deposits, the highest in the last 5 years.
Term deposits outperformed other segments by a wide margin, impacted due to a rise in interest rates. In absolute terms, it increased by Rs 20.6 lakh crore from June 2022 and reached Rs 185.3 lakh crore as of June 30, 2023, a Care Ratings report said.
Saving account deposits witnessed a moderate growth of 4.9 % y-o-y in Q1FY24 versus 10.5% over a year ago period. In absolute terms, it increased by Rs.2.8 lakh crore in Q1FY24 over Q1FY23 and reached Rs 59.6 lakh crore as of June 30, 2023. The segment lost market share by 240 bps y-o-y in Q1FY24 and held a share of 32.2% of the total deposits as of June 30, 2023. Current and savings accounts reported lower growth compared to the previous year in the same period.
Private banks lead
Private banks’ (PVBs) deposits saw a healthy growth of 16.8% in Q1FY24 due to aggressively increasing deposits from the market to meet the credit demand. In addition, offering higher interest rates on saving accounts helped them to outperform PSBs (10.6%). Compared to Q4FY20, PVBs saw a huge outperformance due to attractive Interest rates offered especially on CASA deposits.
In terms of deposits market share, PVBs accounted for a 33.6% share gaining 122 bps y-o-y in Q1FY24, whereas PSBs held a 60.6% share, losing 107 bps y-o-y. PVBs have been continuously gaining market share due to aggressive acquisition of clients and offering better services.
CASA deposits
In absolute terms, CASA rose by Rs.4.6 lakh crore in Q1FY24 reaching Rs.77.2 lakh crore as of June 30, 2023. PVBs and PSBs expanded their CASA by Rs.2.4 lakh crore and Rs.2.2 lakh crore, respectively during the quarter. SCBs CASA rose by 6.4% y-o-y primarily driven by PVBs.
PVBs reported a CASA growth at 9.9% y-o-y in Q1FY24, whereas PSBs reported a slower growth at 5.0%. Current accounts saw a robust growth of 11.9%, however, an uptick of 4.9% in savings accounts slowed the overall CASA uptick to 6.4%.
SCBs’ term deposit growth outperformed CASA deposit growth in the quarter and is expected to gain pace going forward due to a rise in term deposit rates, causing a drop in CASA ratio.
SCBs’ CASA ratio declined by 244 bps y-o-y and stood at 41.6% as of June 30, 2023, as compared to 44.1% over a year ago due to a rise in term deposit rates which drove higher growth for the term deposit segment.
Further, the term deposit saw growth due to a rise in interest rates. Within this, PVBs dropped 18 bps y-oy to 45.8% as they offered higher rates on saving accounts whereas PSBs dropped by 59 bps y-o-y. SFBs’ CASA, a small base, ratio expanded massively by 445 bps y-o-y to 41.8% as they offered high rates on term deposits.
