Private Sector Banks Raise Fixed Deposit Market Share: RBI Data

Private sector banks have raised their market share in term deposits, which is at 35% in the second quarter (Q2) of FY24. This stood at 32% in the fourth quarter (Q4) of FY23. 

On the other hand, public sector banks (PSBs) exhibited a 200 basis points (bps) loss in terms of their share in fixed deposits (FDs), dipping to 60% as against 62% during the same period. The market share in the first quarter of FY24 clocked in at 33% for private banks and 61% for PSBs.

As per the Reserve Bank of India (RBI) data, FDs of private sector banks have witnessed a spike, touching Rs 39.52 lakh crore from Rs 33.43 lakh crore from March 2023 to September 2023. 

At the same time, the term deposits of PSBs have spiked to Rs 68.28 lakh crore from Rs 64 lakh crore during the same period. The private sector banks have consistently raised their market share since Q4FY23, backed by aggressive client acquisition and the offer of better services.

Experts state that deposits have witnessed an increase along with a strong year-on-year (YoY) rise in term deposits. As per them, the rise is driven by the credit growth that private banks are experiencing. 

Among the maturity period, term deposit mobilisation in the one- to three-year category displayed robust performance, with deposits spiking to Rs 69.39 lakh crore in September 2023 from Rs 61.18 lakh crore in March 2023.

Of the total share, 65% of the deposits are concentrated in this tenure. The spurt in interest rates is estimated to be one of the reasons for the push to demand among consumers for this maturity period.

As per the data, in the reported quarter, 50% of term deposits continue to be 7-8%, as against the share of 20%  in Q4FY23. At the same time, 28.61% of consumers put their funds in the 6-7% interest rate range during Q2FY24.

About 80%of the total funds are parked in FDs in the 6-8% range. On the other hand, term deposit rates are estimated to be moving towards attaining their all-time high.

Experts state that the growth in deposit rates may continue along with the competitive intensity during FY24. As per them, the deposits are expected to witness 11-12%  growth until the end of March 2024.

Additionally, elevated deposit rates are anticipated to have an impact on the net interest margin (NIM) of the banks. In the deposits, the share of non-individual deposits has moved to 52% from 50%.

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