Deposit growth in India rose to 13.3% in June 2026 from 12.3% in January, even as real returns on deposits fell sharply from 2.52% to 0.87%. The robust growth is notable, particularly when examining domestic deposits, which grew at around 13% excluding FCNR(B) funds. This suggests that lower real interest rates have not deterred savers from keeping their money in banks, according to SBI Research.
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The preference for term deposits has also increased, with these accounting for 61.6% of total deposits in March 2026, up from 55.2% in March 2022, while the share of savings deposits decreased. Banks are actively competing for deposits as credit growth continues to outstrip the rate of deposit growth. To attract savers, some banks have been offering relatively high fixed deposit rates of up to 7.5%.
However, the recent surge in deposits, particularly noted in July, has been influenced significantly by inflows from foreign-currency deposits following special measures from the Reserve Bank of India. In July alone, deposits increased by approximately $115 billion over three fortnights, primarily driven by these inflows.
Despite these fluctuations, the underlying trend indicates that savers continue to favor bank deposits, supported by the continued competitive environment among banks for securing domestic funds. As credit growth remains higher than deposit growth, banks face ongoing pressure to secure stable funding, making the competition for deposits even more crucial.