While banks are trying to build their deposit base, retail inflation has been eroding returns for savers. However, that has not deterred investors from parking their money in bank deposits
Indian private lenders are expected to report robust deposit growth in the March quarter, going by initial numbers announced by three banks.
On Monday, HDFC Bank, IndusInd Bank and Federal Bank reported key business performance indicators, including loan and deposit growth, to stock exchanges. India’s largest private sector lender HDFC Bank said its deposit base rose to about ₹13.35 trillion as of 31 March, registering a growth of around 16.3% from a year earlier.
Federal Bank reported provisional total deposits of ₹1.72 trillion as of 31 March, an increase of 13% from a year earlier. IndusInd Bank also reported strong deposit growth of 27% to ₹2.56 trillion at the end of the March quarter of FY21.
While banks are trying to build their deposit base, retail inflation has been eroding returns for savers. However, that has not deterred investors from parking their money in bank deposits. As of 12 March, bank deposits stood at ₹149.55 trillion, up 12% from a year earlier.
“Most banks are focusing on garnering deposits (particularly current account and savings account and retail term deposit) to ramp up their liability franchises and reduce dependence on bulk deposits," Motilal Oswal said in a note on 31 March.
All three banks reported healthy growth in current account and savings account (Casa) deposits in the March quarter. While HDFC Bank’s low-cost Casa deposits grew 27% from a year earlier to ₹6.15 trillion in the fiscal fourth quarter, Federal Bank’s Casa deposits expanded 26% to ₹58,381 crore.
Two of the three banks also exceeded industry lending growth levels in the March quarter. While HDFC Bank’s loans grew 13.9% from a year earlier, Federal Bank reported loan growth of 9%. However, IndusInd Bank’s net advances rose 3% in the same period and were lower than the 6-6.5% average growth in the banking system.