Fall in Bank Deposit Rates

As bank Deposit Rates Fall, Savers are Diversifying their Investments

Share of bank deposit in household sector's investments in financial assets has declined to 41% in FY16 from FY14, show RBI data

Friends today we analyse how the deposits in banks declined year by year up to now.

According to RBI data, the percentage of bank deposit in over all savings/investments made by household sectors in financial assets declined from 54% to 41% between financial years 2013-14 and 2015-16.

  

    While median deposit rates inched up from 7.42% in March 2013 to 7.78% in September 2013, they started trending lower gradually thereafter.

Deposit rates cuts gathered momentum from June 3025 on-wards declining 1.11% to 6.63% in June 2016.

In FY2015-16, investments in financial assets--including bank deposits, non-banking deposits, life insurance funds, provident and pension funds, currency, shares and debentures--in the economic grew by Rs.14,89,853 Cr.

Financial assets in FY15 and FY14 were up by Rs. 12,72,240 Cr. and Rs. 11,99,278 Cr., respectively.

   In its annual report for 2015-16, the RBI said the increase in gross financial assets was driven primarily by a turnaround in small savings and increases in investment in equities and mutual funds, tax-free bond by public sector units and currency holdings even as the growth in Bank deposits held by household moderated.

"Time-deposits were muted by the moderation in deposit rates..Large issuance of long term tax-free bonds by various public sector units contributed to the deceleration in deposits, besides the higher returns on small saving which are not subject to tax deduction at source,"the RBI said.

तोह अभी तक आपने सारे रिकार्ड्स देख लिए ? कैसे बैंक डिपोसिटस घट गएँ हैं. लोग डिपोसिटस  के बजाये बांड्स, इन्सुरांस और तमाम इन्वेस्टमेंट पॉलिसीस में अपना  पैसा लगा रहे हैं. 

पर फिर भी  बैंक्स नहीं  घबड़ा रही  

However, bankers are not unduly worried by the slack deposit growth due to saver's preferences for higher-yielding investments.

"If the credit appetite in the economy is muted, we are better off modulating the deposit growth through deposit rate cuts. If credit growth picks up, we have the flexibility to up the deposit rates attract" senior official of a public sector bank.

You must have to rethink before investing in financial deposits, now days one must have a track record of banks giving interest in deposits before investing because the drastic emergence of banking sector may lead in short term deposits with a low rate.

I suggest you to go with mutual funds compared to fixed deposits.