Bank Deposit Growth Hits 7-Quarter Low at 9.9%

Bank deposits in India are experiencing a significant slowdown, as reported by the Reserve Bank of India (RBI). In the July-September 2025 period, the growth rate dropped to 9.9%, marking the lowest level in seven quarters. This is a notable decline from the 11.7% growth witnessed in the same period last year.

The metropolitan branches, which typically hold a larger share of deposits, recorded a decrease in growth to 9.6% in September 2025, down from 12.7% a year ago. In contrast, rural and semi-urban branches have shown more resilience, achieving deposit growth rates of 11.7% and 10.7%, respectively, during the same period, indicating a divergence in deposit trends based on location.

Public sector banks (PSBs) have seen a slight improvement in their share of total deposits, rising to 57.6% from 57.3% in the previous quarter. On the other hand, private sector banks experienced a decline in deposit growth, falling to 10% in September from the much higher rate of 15.1% a year ago. This trend raises questions about the competitive landscape between public and private banks in attracting deposits.

In terms of deposit types, there has been a decline in term deposit growth, which stood at 11.6% during the reporting quarter. However, current account deposits grew at 9.3%, and savings deposits showed a modest increase of 6.7%. These figures suggest shifting preferences among consumers, with many opting for more liquid forms of savings rather than locking in funds for longer periods.

By the end of September, a significant 69.8% of term deposits were held in the original maturity bucket of ‘one to three years’, an increase from 66.8% a year ago. Interestingly, 20% of term deposits were for maturity periods of up to one year, reflecting a cautious approach by depositors in the current economic climate.

The data also revealed that the share of term deposits offering interest rates below 7% surged to 46% in September, compared to just 31.2% a year ago. This increase in lower-yielding deposits highlights changing trends in the savings behavior of Indians, potentially driven by economic uncertainties and shifting interest rate policies.