Deposits at Private Banks are growing more quickly in FY 2023

While public sector banks (PSBs) continue to grow deposits quickly, private sector banks' rate of deposit growth was higher in FY23. The top five PSBs State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank and Union Bank of India have put forward a total of Rs 8.43 trillion in deposits in FY23.

SBI's total deposits increased by the most, or Rs 3.72 trillion, over the past year. Analysts attribute the increase in deposits to the PSU banks' large branch network, the high level of comfort that borrowers have with a bank that is backed by the government, and the PSU banks' expanding collaborations with outside parties like business correspondents and fintech.

The total amount of bank deposits held by all scheduled commercial banks right now in India has increased around 9.6% year over year against an increase of 8.9% YoY from the previous year. In contrast, deposits totalled Rs 6.60 trillion at the top five private banks in FY23: HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and IndusInd Bank.

When large PSU banks collected a total of Rs 15.17 trillion in deposits, compared to Rs 4.78 trillion by private banks, the deposit mobilisation gap between PSBs and private lenders was at its highest during FY20. Deposits at Union Bank alone totalled Rs. 4.53 trillion in that fiscal year, surpassing even SBI's Rs. 3.30 trillion. Customers moving their money from private banks to PSU banks in response to crises at YES Bank and IL&FS, among other institutions, are credited with driving the sharp increase in incremental deposits of PSU banks in FY20, according to analysts.

But after FY20, the gap between the two groups of lenders shrunk. For example, private banks reported an increase in deposits of Rs 4.87 trillion in FY21, compared to large PSBs' Rs 6.55 trillion. While private lenders reported an increase of 5.40 trillion rupees, PSBs reported an increase of 6.73 trillion rupees in FY22.

While both PSBs and private banks were able to deliver deposits that grew by almost double digits in FY23, their low-cost current account and savings account (CASA) ratio has slowed down as a result of customers switching to term deposits. SBI's CASA ratio dropped from 45.28% to 43.80% from a year ago, despite the fact that its total deposits increased 9.2% YoY to Rs. 44.23 trillion as of March's end.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in the stock market is subject to unpredictable market-related risks. The author has no plans to invest in this offer and also the author does not recommend investing in any offer published on this website.