Since the fiscal 2022, the Indian banks have been remarkably successful in transmitting the calibrated hike in policy rates to both borrowers as also lenders over the time curve, ably supported by twin synchronous pillars; unconventional yet strategically woven fiscal and other policy supports, and slew of interwoven elastic measures initiated by the regulator aimed at fortifying the financial fiefdom, the State Bank of India Ecowrap report said.

The robustness in banking architecture in India of late is revealed by bank credit growth that stood at 20.2 per cent in 2024 (net Rs 27.6 lakh cr), continuing the momentum of FY23 (15 per cent) and moving sizably up from FY22 (8.6 per cent), it added.

In turn, deposit accretion picked up in the later part of the year, growing by 13.5 per cent in FY24 i.e. net Rs 24.3 lakh cr (though better than FY23 (9.6 per cent) and FY22 (8.9 per cent).

The report, released on Monday, highlighted that the aggressive pitch by select banks to woo deposits, amidst fluctuating liquidity constraints, saw the banking system raising the deposits rate in H2, despite RBI holding the rate since February 2023.

All scheduled commercial banks (ASCBs) have increased weighted average domestic term deposit rates (WADTDR) on outstanding deposits by 96 bps and weighted average term deposit rates on fresh deposits by 22 basis points while across banking groups, the pass-through to WADTDRs on fresh and outstanding deposit rates has been higher for Public Sector Banks(PSBs) than Private Sector Banks(PVBs).

PSBs have imbibed the competitive spirit in true sense, offering optimal rates to discerning depositors as they galvanise to meet the surging credit demands from the economy.

A palpable shift in depositors’ behaviors has been the inclination to capitalise on interest rate differentials between core and term deposits, with the incremental share of TD increasing to 93 per cent (estimated) and CASA share declining to 7 per cent in FY24, the report highlighted.

The report also said that the increase in deposit rates, the higher interest rate differential for senior citizens and the special deposit schemes for senior citizens have all propelled a tectonic shift in deposits accretion for senior citizens ably supported also by Government initiatives on Senior Citizen Savings Scheme (SCSS), Mahila Samman Savings Certificate and so on.

The SBI Research estimated that there could be now close to 74 million senior citizens term deposits accounts in the country, with aggregate deposits to the tune of Rs 34 lakh crore. In fact, the share of senior citizen term deposits, by number of accounts, increased to around 30 per cent now from around 15  per cent earlier in term deposits kitty.

Out of such 74 million odd accounts, almost 73 million accounts should be in the size bracket of up to Rs 15 lakh. By assuming interest on senior citizen bank deposits being 7.5 per cent, the interest earned would stand at Rs 2.7 lakh crore during the year.

The report said that ”these 74 million accounts is a significant jump from that in FY19, when we had estimated that there were around 41 million senior citizens term deposits accounts in the country with a total deposit of Rs 14 lakh crores”.

In a short span of  around 5 years, there has been an increase of 81 per cent growth in the number of accounts and 143 per cent in the amount in this cohort. The average balance in the accounts has grown handsomely by 38.7 per cent, to Rs 4.6 lakh crore from earlier Rs 3.3 lakh crore.

The total interest earned by senior citizens works out to Rs 2.7 lakh crore; Rs 0.13 lakh crore from SCSS and around Rs 2.57 lakh crore from senior citizen’s bank deposits.