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Deposits Surge as Rates Dive Below 7%
1 Jun
Summary
- Term deposit share below 7% rose to 61.8% in FY26.
- One-to-three-year tenures increased to 69.8% of deposits.
- Term deposits now constitute 61.6% of overall bank deposits.
The share of bank term deposits yielding under 7% significantly increased to 61.8% in fiscal 2025-26, a substantial rise from 27.3% in the previous year. This repricing of liabilities follows a cumulative 125 basis points of policy rate reductions. Deposits with shorter tenures, up to one year, saw a decline in their proportion.
Depositors are increasingly favoring longer maturities. Specifically, term deposits with one to three years of tenure grew to 69.8% by the end of March 2026, up from 50.4% in March 2022. This trend highlights a structural transformation in deposit composition, with term deposits now representing 61.6% of total deposits, while savings deposits decreased to 28.7%.
