The Reserve Bank of India has initiated discussions with scheduled commercial banks to address the slowing pace of deposit growth, which has been on a declining trajectory since December 2025.
The moderation in deposits coincides with a continued shift in household savings towards equities and other financial instruments such as mutual funds, amid relatively low interest rates. While the financialisation of savings has been an ongoing trend, recent data indicates an acceleration over the past few months.
Deposit growth has eased from 12.7 per cent in December 2025 to 10.8 per cent as of March 15, 2026. In contrast, the credit-deposit (C-D) ratio — which measures the proportion of deposits deployed as loans — has risen from 81.7 per cent to a record high of 83 per cent during the same period, according to RBI data.
While a rising C-D ratio reflects stronger credit demand and improved intermediation, persistently elevated levels could strain liquidity buffers, increase reliance on market borrowings, and pose financial stability risks. Meanwhile, net inflows into equity mutual funds rose sharply to ₹40,450 crore in March from ₹28,054 crore in December, despite ongoing market volatility.
“Bank credit growth is expected to remain in the 13–14.5 per cent range by FY27. On the liabilities side, deposit growth is likely to stay moderate at 11–12 per cent, supported by term deposits but constrained by shifting savings preferences and competitive investment alternatives,” said Sanjay Agarwal, senior director at CareEdge Ratings.
According to a report by SBI Research, states including Gujarat, Bengal, Madhya Pradesh, Andhra Pradesh and Karnataka have seen a relatively higher migration of deposits towards financial markets.
In recent meetings, the central bank has sought inputs from lenders on measures to attract deposits, particularly large-ticket ones, to keep pace with robust credit growth, according to a Bloomberg report.
Among the suggestions discussed was allowing banks to offer differentiated deposit rates — lower rates for financial institutions and higher rates for retail customers and non-financial corporates — enabling lenders to better manage regulatory costs while attracting more stable funding.
Banks have also proposed introducing innovative deposit products such as notice deposits — which offer higher interest rates with pre-agreed withdrawal notice periods — and market-linked deposits, where returns are tied to financial benchmarks.
Earlier in February, finance minister Nirmala Sitharaman had criticised banks for mis-selling financial products and urged them to refocus on their core strength.