Canara Bank, Union Bank Introduce New Deposit Schemes As Growth Slows

State-owned banks Canara Bank and Union Bank of India launched new deposit schemes to mobilise funds when aggregate growth in the banking system has been slowing down. According to the latest data released by RBI, deposit expansion has been reduced to 10.3 per cent in 2024-25 to date from 13.5 per cent in 2023-24. Public sector banks are now estimating deposit expansion between 9–11 per cent during the current fiscal year.

To address this issue, Union Bank has introduced a fixed deposit scheme with a term of 375 days with an interest rate of 6.75 per cent per annum. The scheme is available to resident individuals aged between 18 and 75 years. Joint accounts are permitted, but only the main account holder will be covered by the insurance cover that comes with the deposit. Senior citizens will get an extra 0.50 per cent interest on deposits.

The minimum deposit to be kept is Rs 10 lakh, and the maximum limit is set at Rs 3 crore. The scheme also offers features such as premature withdrawal as well as loans against deposits.

What makes this product unique is the addition of a health insurance feature. The plan offers a 375-day Super Top-up Health Insurance plan with a sum insured of Rs 5 lakh and cashless hospitalisation. Lifestyle-related benefits are also added through the RuPay Select Debit Card.

The bank stated the plan is intended to provide a mix of savings and health protection to the depositors seeking extra value for their money.

Canara Bank, however, introduced Canara TruEdge, a product for both current and savings account customers. The product, the bank said, is intended to provide account-level benefits specific to various customer segments on the basis of their financial and operational behaviour.

One of the major features of Canara TruEdge is its benefit pattern that is tied to the Monthly Average Balance (MAB) held in the preceding month. Those customers with higher average balances get charge waivers and fee reductions in the subsequent month. This pattern is meant to encourage account holders to hold larger balances.

The bank is also providing customised service under this scheme, with specific relationship managers serving as a point of contact for the eligible customers. This is generally a service linked with private banking or high-value accounts and reflects a shift towards more segmented servicing models even in public sector banks.

Both banks appear to be reacting to slower deposit growth by presenting multi-feature products that embed traditional banking with other services. As credit demand is constant, banks are forced to raise more stable, low-cost funds. These new products try to differentiate themselves by providing customers with something other than interest returns.

The Union Bank scheme, for example, stands out obviously for customers who are ready to park larger amounts, with a minimum Rs 10 lakh required deposit. The scheme also seems to address elderly citizens with superior returns plus healthcare coverage, an age group often demanding fixed-income options.

Canara Bank's attention is on keeping customers and strengthening existing relationships through offering benefits tied to usage patterns for accounts, with the additional prospect of a better service experience close to private sector norms.