Indian Banking Sector - Current And Savings Account Deposit Compositions Are Yet To Unwind Fully: Systematix

he Indian banking system has witnessed a significant drop in CASA deposit growth rates to 8.8% and 9.4% YoY.

<div class="paragraphs"><p>A person holding Indian rupee banknotes&nbsp;for&nbsp;photograph.&nbsp;</p><p>(Photo: Usha Kunji/BQ Prime)</p></div>
A person holding Indian rupee banknotes for photograph. 

(Photo: Usha Kunji/BQ Prime)

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Systematix Research Report

The Indian banking system has witnessed a significant drop in current account and savings account deposit growth rates to 8.8% and 9.4% YoY (from higher levels of 21% and 16.7% YoY, respectively, in Q4 FY21).

During H1 FY23, current account/ savings account/ CASA deposits posted (down) 4.1%/ 1.7%/ 0.4% growth rates, respectively. Notably, three key factors playing out here are: case-

  1. unwinding of household savings in deposits induced by the pandemic, case,

  2. rise in term deposit rates leading to cannibalisation of SA deposits, and

  3. moderation in NRI deposit inflows, and

  4. rise in corporate cash balances (as a percentage to asset) aids banks’ overall deposits.

While it would be worthwhile to ascertain the degree of unwinding left to take place due to case i, we perceive a huge amount of unwinding remains.

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Systematix Indian Banking Sector Update.pdf


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