Bank deposit growth has picked up recently, as banks have increased their interest rates on term deposits. The chart shows, however, the rate of growth of total bank deposits has indeed gone up, that’s entirely due to very strong growth in term deposits.
Also see | Demand deposits down, term deposits up (PDF)
As the chart shows, the rate of growth of demand deposits has come down dramatically. That’s not all—demand deposits with banks have declined in absolute terms as well, from Rs 6.01 trillion as on 3 December 2010 to Rs 5.73 trillion on 11 February 2011. That indicates people are shifting their demand deposits to term deposits to take advantage of the higher interest rates. For banks, the increasing proportion of term deposits will push up costs.