Share of term deposits offering interest rates below 7 per cent rise
Deposits in PSU banks rise, private sector bank deposits fall
Share of term deposits offering an interest rate of above seven per cent dropped sharply at the end of the September quarter. Share of term deposits with an interest rate of less than seven per cent surged 46 per cent in September from 31.2 per cent a year ago, a report by the Reserve Bank of India (RBI) showed.
The fall in the deposit rate reflects the transmission of the cut in policy rates. The RBI, so far in the year, has cut the repo rate by 100 basis points (bps). Starting September, the RBI also lowered the cash reserve ratio for banks by 100 bps to three per cent of a bank’s net demand and time liabilities. Loans that are linked to the external benchmark, or the repo rate, immediately fall as the RBI cuts rates.
Though there is a declining trend in growth in term deposits, which fell to 11.6 per cent, these deposits remained higher than that of current and savings deposits in September 2025. Current deposits accounted for 9.3 per cent while savings deposits accounted for 6.7 per cent in September.
Share of term deposits of Rs 1 crore and above rose 12.3 per cent from the previous year by the end of September, and the share stood at 45.6 per cent, marginally higher than 45.3 per cent a year ago. It showed that 69.8 per cent of term deposits were of one to three years category, up from 66.8 per cent a year ago. Meanwhile, 20 per cent of term deposits were of maturity up to one year.
Share of deposits of public sector banks rose to 57.6 per cent in September, from 57.3 per cent in the previous quarter. Deposits of state-owned banks rose 9.6 per cent from the previous year. Meanwhile, for private sector banks, deposit growth fell to 10 per cent in September from 15.1 per cent a year ago.
Maharashtra, Uttar Pradesh, Karnataka, NCT of Delhi, Tamil Nadu, and West Bengal collectively accounted for 54.2 per cent of total household deposits in September. In this, Maharashtra contributed to 16.5 per cent of total household deposits, the report said.
Metropolitan branches, which have a larger share of deposits, exhibited moderation in deposit growth to 9.6 per cent in September, down from 12.7 per cent a year ago. Meanwhile, rural, semi-urban, and urban branches registered 11.7 per cent, 10.7 per cent, and 9.5 per cent deposit growth, respectively.
