Deposit growth trailing a myth: SBI economists

Mumbai: Concerns on the trailing deposit growth are a statistical myth, as the overall quantum of deposits have outpaced credit since FY22, economists at the country’s largest lender SBI said on Monday.

In a report, they said that nearly half of the term deposits in the system are held by senior citizens, stating that the younger population is seeking other higher yielding avenues. The economists pitched for changes in tax treatment on deposits so as to help banks’ larger flows to help with the credit growth. The report said the absolute quantum of deposit growth since FY22 stands at Rs61 lakh crore, which is higher than the Rs59 lakh crore of credit growth.

“The myth of a flagging deposit growth appears as just a statistical myth with credit growth outpacing deposit growth being tom-tommed as a deceleration in deposit growth,” the report said. It can be noted that for over one year, concerns are being expressed about the wedge between deposit and credit growth, which has led to questions around the sustainability of the credit growth in the absence of sufficient deposit accretion.