Fixed deposits (FD) have once again become the preferred means of saving for people. According to the latest data from the Reserve Bank of India (RBI), the growth rate of fixed deposits has been much higher than that of current and savings accounts (CASA). The share of fixed deposits in total deposits reached 61.4 percent in September 2024, up from 59.8 percent in the same month last year.

Interest rates became the main reason.

According to the RBI report, due to the tight monetary policy, the demand for fixed deposits with higher interest rates has increased. The share of fixed deposits at an interest rate of seven percent or more increased to 68.8 percent, while it was 54.7 percent last year.

The leading role of metropolises

Metropolitan bank branches contributed 66.5 percent of the total deposit growth. These branches accounted for 54.7 percent of the total deposits. Every segment of the population – rural, semi-urban, urban , and metropolitan – recorded double-digit growth in deposits.

Contribution by women depositors and senior citizens

According to the report, women depositors account for 40 percent of the total deposits held personally. At the same time, the contribution of senior citizens has also increased. In September 2024, the share of senior citizens' deposits increased to 20.1 percent, which was 19.7 percent a year ago.

Performance of Public and Private Banks

Deposit growth in public sector banks was 9 percent year-on-year, up from 8.1 percent in the previous quarter. However, it lagged behind the less than 15 percent growth rate of private and other bank groups.

Decline in loan growth

While deposits saw a rise, loan growth slowed down. Bank loan growth declined to 12.6 per percent in September 2024 from 15.3 per March 2024.

Promoting women andagrice culture sector

The share of women borrowers in personal loans stood at 23.6 percent in September 2024. Agriculture, industry, housing, and personal loans also witnessed steady growth.

It is worth noting that RBI's data clearly shows that high interest rates and strict monetary policies are attracting people towards fixed deposits. If interest rates remain high in the future too, then this trend of fixed deposits may get stronger.