India's banking sector has witnessed a significant shift in deposit composition from FY19 to FY26, with the share of non-household deposits - including financial corporations and non-financial corporations - rising to 26.3% in FY26 from 20.5% in FY19, according to a Crisil report. Total deposits in India's banking sector grew 13.5% year-on-year to ₹262 trillion in FY26, driven by liquidity infusion measures, reduction in cash reserve ratio, and income tax-related benefits. Despite this growth, households' contribution to the banking system's deposit base declined to 59.3% in FY26 from 63.2% in FY19.
The composition change reflects customer preference for higher-yielding deposit products, with the share of term deposits increasing to 61% in FY26 from 58% in FY19, while the CASA ratio dropped to nearly 39% in FY26 from almost 42% in FY19. As reported by Crisil, this moderation in CASA ratios indicates customer preference for relatively higher-yielding deposit products and increasing financialisation of savings. The deposits of lenders have also changed, with private banks increasing their share of system deposits to 35.4% in FY26 from 28.6% in FY19, while public sector banks' share dropped to 55.6% from 63.2%.
Metropolitan centres continue to account for the largest share of system deposits, increasing to 53.2% in FY26 from 51.6% in FY19, while the share of rural and semi-urban centres remained stable at 26.1% compared with 27% in FY19. As of fiscal 2026, rural and semi-urban centres had CASA ratios of 56.1% and 48.7% respectively, higher than those of metropolitan and urban centres at 32.9% and 38.6% respectively. The deposits of lenders have also changed, with private banks increasing their share of system deposits and public sector banks ceding ground.
Despite the moderation in its share in overall deposits, the households segment remains the cornerstone of low-cost funding, accounting for nearly 70% of system low-cost CASA balances as of FY26. In comparison, financial corporations and non-financial corporations contributed only nearly 22% of total CASA balances, indicating that the growing share of non-household deposits has not translated proportionately into low-cost funding accretion. Recent RBI measures to encourage foreign currency non-resident (FCNR(B)) deposit mobilisation are expected to support incremental inflows from non-residents, potentially leading to a modest uptick in the ROW segment's contribution to overall deposits in fiscal 2027.
