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Term deposits captured an impressive 98% of incremental deposits from April to December 2023 even as there has been a notable shift in credit growth across key sectors in January 2024 as compared to the same period in the previous year, the Reserve Bank of India (RBI) said in its quarterly basic statistical returns on deposits for December 2023.

The share of low-cost current account and savings account (CASA) dwindled to a mere 2% during this period, indicating a significant preference among customers for high-yielding fixed and term deposits.

According to the RBI report, there was a noticeable migration towards higher interest rate brackets for term deposits. Those bearing over 7% interest saw their share rise to 61% of the total term deposits in December 2023, up from 55% in the previous quarter and 34% in March 2023. The overall deposits across banks reached Rs 201.95 trillion as of February 9.

Term deposits have gained prominence, constituting 60.3% of total deposits as of December 2023, compared to 57.2% in March 2023 and 55.2% in March 2022. In contrast, the share of CASA deposits has tapered off to 41.4% as of June 2023, following an increase from 42% in 2020 to 45% in June 2022, and then moderating.

Credit growth

Despite an increase in the risk weighting for consumer credit exposures, the personal loan segment continued to exhibit strong growth in January of this year. The segment expanded by 21% year-on-year (YoY) during this period, demonstrating resilience compared to the 22.3% YoY growth recorded in October 2023.

There has been a notable shift in credit growth across key sectors in January 2024 as compared to the same period in the previous year.

According to the RBI, the credit extended to the industrial sector witnessed a year-on-year growth of 7.8% in January 2024, slightly lower than the 8.7% recorded in the corresponding month of 2023. The services sector, on the other hand, experienced a credit growth of 20.7% in January 2024, marginally down from the 21.4% reported in January 2023.

A significant improvement was observed in the credit extended to agriculture and allied activities, which surged to 20.1% in January 2024, marking a substantial increase from the 14.4% recorded in the same month the previous year, as per the RBI’s data.

These figures suggest dynamic trends in credit allocation, reflecting both sector-specific challenges and opportunities within the Indian economy. The RBI’s report provides valuable insights into the evolving landscape of credit growth, with implications for various industries and sectors.

  • Published On Mar 4, 2024 at 08:00 AM IST

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