Mumbai: With gold and real estate losing traction and stock markets remaining volatile, fixed deposits are continuing to witness double digit growth despite banks cutting deposit rates.
According to the Reserve Bank of India (RBI) data, aggregate deposits outstanding as on October 2, stood at Rs 91.63 lakh crore, a rise of 11 per cent from Rs 82.89 lakh crore during the same period of last year.
Of the total aggregate deposits, time deposits or fixed deposits grew by 10.64 per cent to Rs 83.06 lakh crore while demand deposits (current account and saving account deposits) grew by 9.6 per cent to Rs 8.5 lakh crore. As on October 2, 2014, the outstanding time deposits were Rs 7.5 lakh crore while demand deposits were Rs 7.81 lakh crore.
Since the beginning of January 2015, the RBI has cut its policy or repo rate by a cumulative 125 basis points while banks have cut one year deposit rates by an average 130 basis points.
Karthik Srinivasan, senior vice-president, ICRA. told FC: “Retail financial savings have been increasing in the last couple of quarters as return expectations on physical assets such as gold and real estate have been falling. The surplus money of individuals is getting parked as deposits. On the corporate side, the economic growth is sluggish and there are no new investment avenues so companies too are parking surplus in deposits.”
“The other reason is that with deposit rates falling, people want to lock in a 2-3 year deposit to get better rates,” added Srinivasan. Paresh Sukthankar, deputy managing director, HDFC Bank, said, “Deposit growth continues to remain high despite rate cuts and there are two reasons for it. One is the fact that inflationary expectations have been coming down and depositors are getting real returns.
Therefore, fixed deposits have become attractive.” “The real spurt in deposits had come in the June quarter and that has remained in the second quarter too as deposit rates are falling. This is because customers want to lock in their deposits at the present rates,” added Sukthankar while speaking to reporters in an earnings call.
HDFC Bank that declared its results on Wednesday saw its time deposits increased by 37.6 per cent over the previous year at Rs 305,575 crore, resulting in CASA proportion falling to 40 per cent as on September 30. Total deposits as of September 30 were Rs 506,909 crore, an increase of 29.7 per cent over September 30, 2014.
Your email address will not be published. Required fields are marked *
Ola’s connected car platform Ola Play, now in Pune
Dwarkadas Chandumal Jewellers presents “Treasures of Nature”
MUSIC ICON BAPPI LAHIRI AWARDED 7TH BHARAT RATNA DR. AMBEDKAR AWARD BY THE PRESIDENT OF INDIA SHRI RAM NATH KOVIND
Select a category
Play slots online with critic.net
2014 The Global Indian New Network (TGINN)