ASSOCHAM says bank savings deposit growth slowed post-COVID as households shift more money to equities, mutual funds
New Delhi, July 23
Growth in savings deposits with Scheduled Commercial Banks has moderated in the post-COVID years as Indian households increasingly diversify their financial savings into market-linked investment instruments such as equities and mutual funds, according to an ASSOCHAM Global Research report.
The report, "Pattern of Savings Deposits with Scheduled Commercial Banks in India", said the average year-on-year growth in savings deposits slowed to 8.6 per cent during FY2020-21 to FY2024-25, compared with 14.8 per cent during FY2015-16 to FY2019-20.
"The moderation reflects a healthy evolution in household financial behaviour rather than any weakening of the deposit base, as savings deposits continue to remain an essential component of household financial portfolios while investors allocate a portion of their savings to other financial assets," the report said.
The report further added that the post-pandemic period has seen growing participation by retail investors in capital markets. Citing the Economic Survey 2025-26, it said the number of equity investors increased from around 3.1 crore in FY20 to more than 11 crore by FY25, indicating a rising preference for equity investments among households. It also cited RBI data showing the share of equity and investment funds in total household financial assets rose from 15.7 per cent in March 2019 to 23 per cent by March 2025, while mutual fund assets increased to over Rs 80 lakh crore.
Despite the moderation in growth, the report said savings deposits have continued to expand steadily. Total savings deposits with Scheduled Commercial Banks rose from Rs 13.77 lakh crore in FY2010-11 to Rs 65.33 lakh crore in FY2024-25, registering cumulative growth of nearly 374 per cent over the 15-year period. Over the last decade alone, savings deposits increased by 158 per cent, from Rs 25.36 lakh crore in FY2015-16 to Rs 65.33 lakh crore in FY2024-25.
According to the report, Indian banks continued to dominate savings deposit mobilisation, accounting for 99.1 per cent of total savings deposits in FY2024-25, with deposits of Rs 64.77 lakh crore. Foreign banks accounted for less than one per cent of total savings deposits, reflecting their greater focus on corporate banking, trade finance and wealth management rather than retail deposits.
The report also noted that the long-term expansion in savings deposits has been supported by financial inclusion initiatives, wider banking access and digital banking adoption. It noted that demonetisation in FY2016-17 and precautionary savings during the COVID-19 pandemic temporarily boosted deposit growth, before it normalised as households diversified their investments.
"Overall, India's savings deposit system remains large, resilient and well positioned for future growth. Continued financial inclusion, digital banking adoption, supportive regulatory measures and sustained household engagement with the formal financial sector are expected to further strengthen the savings deposit base and support long-term economic development," the report said.
— ANI
Reader Comments
I shifted some of my savings to mutual funds last year after taking a course on basic finance. The returns are definitely better than bank interest rates. But I still keep a chunk in FD for emergencies. Balance is important.
The government needs to do more to protect small investors. Many people are putting money into mutual funds without understanding the risks involved. What happens when there's a market crash? The 2008 crisis showed us that equity can be risky. Banks at least guarantee your savings.
Interesting trend. In the US, we also saw this shift after 2008. But I'm surprised that foreign banks have less than 1% of savings deposits in India. They probably focus on high-net-worth clients anyway. Still, it shows how domestic banks are the backbone of Indian savings.
I've been investing in SIPs for 5 years now and the growth has been amazing. But the real problem is that many people in rural areas still don't have access to banks or the internet. We talk about financial evolution, but first we need basic financial inclusion.
The report says savings deposits grew from 13.77 lakh crore to 65.33 lakh crore in 15 years. That's a 374% increase! But inflation in that period has been around 6-7% annually. So real returns on savings deposits are actually negative. No wonder people are moving to equities. The bank interest rates have been pathetic.
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