India's savings deposits with Scheduled Commercial Banks (SCBs) have experienced a significant slowdown in growth rates, according to an ASSOCHAM Global Research report titled 'Pattern of Savings Deposits with Scheduled Commercial Banks in India'. The average year-on-year growth in savings deposits eased to 8.6% during FY2020-21 to FY2024-25, representing a substantial decline from the 14.8% growth rate recorded during FY2015-16 to FY2019-20. This deceleration reflects a fundamental shift in household financial behavior patterns, particularly in the years following the COVID-19 pandemic when households increasingly diversified their financial savings.
The moderation in deposit growth is attributed to Indian households increasingly diversifying their financial savings into market-linked investment instruments such as equities and mutual funds, as reported by ASSOCHAM Global Research. This trend represents a healthy evolution in household financial behavior rather than any weakening of the deposit base itself. The shift indicates growing confidence in equity and mutual fund investments among Indian households, marking a significant change in the composition of household financial portfolios. Despite this shift, total savings deposits have shown steady growth, boasting a cumulative increase of nearly 374% over the past 15 years, demonstrating the robustness of India's overall savings deposit system.
According to the ASSOCHAM Global Research report, the moderation reflects a healthy evolution in household financial behaviour rather than any weakening of the deposit base. This characterization suggests that the decline in deposit growth rates is not indicative of a deteriorating financial system but rather represents a natural progression in how households manage their savings. The report emphasizes that this shift represents a positive development in household financial sophistication and risk management strategies, with financial inclusion, enhanced banking access, and digital banking adoption playing pivotal roles in supporting India's savings deposit system and positioning it well for future expansion.
