Private banks have outperformed public sector banks in deposit growth during the first quarter. Private banks have increased their deposits by 12-35% year-on-year whereas public sector banks have only managed a growth range of 5-13%. With the deposit growth lagging the credit growth, both private and public lenders have raised deposit rates to attract more depositors.
“Savings continue to be a challenge, and I think the saver-to-investor momentum continues and especially after elections, this has accentuated,” Shanti Ekambaram, deputy managing director, Kotak Mahindra Bank, said in an earnings call. “We have taken certain steps and initiatives that will help us enhance our deposits franchise. We have simplified the savings product booking, bundled propositions for certain very key segments and focused on value and propositions as we go into the quarter for acquisition of customers,” she said.
Among private banks, IDFC First Bank recorded a 36% Y-o-Y growth in deposits in the first quarter, followed by Bandhan Bank (23%) and Yes Bank (21%). Among public sector banks, Indian Overseas Bank’s deposits grew by 13%, followed by Canara Bank (12%) and Bank of India (10%), according to Capitaline data.
With deposits growing slower, the competition among banks to mobilise deposits is still continuing. Several lenders, including SBI, ICICI Bank, Axis Bank, Bank of Baroda, Bank of India, IndusInd Bank and Yes Bank, have increased fixed deposit rates over the past couple of months to lure customers.
Banks’ credit grew 17.3% to reach Rs 168.8 trillion for the fortnight ended June 28, 2024, while deposits increased by 11.1% to Rs 212.9 trillion, Reserve Bank of India data show.
“We are taking various initiatives for increasing our deposits. There will be a special focus on CASA. We have taken a project where we are reaching out to our existing customers and also new-to-bank clients for balancing CASA accounts.
We have also opened some premium branches which cater to these clients. Premium branches will only be catering to CASA clients so that there is a steady growth of CASA in coming days,” said Ramasubramanian S, executive director, Union Bank of India, in an earnings call.
Private banks have also been aggressive in acquiring term deposits. These lenders increased the share of total term deposits to 33% as of March 2024 from 30% last year while the share of public sector banks fell to 58.5% from 61% over the same period, according to RBI data.
Term deposits of private banks grew 30% to reach Rs 38 trillion as of March 2024, while public sector banks’ term deposits rose 12.7% to Rs 67.7 trillion.