Beyond FDs: The untapped potential of embedded finance in democratizing fixed income for Bharat

FD options, all promising a seamless, fully digital experience. This shift is not just a convenience — it's a sign of an emerging revolution in embedded finance, and with market conditions shifting in favor of safer, more predictable investments, it’s finally fixed-income’s moment to shine.

The Indian fixed-income market, traditionally dominated by Bank FDs, is expanding as non-bank financial companies (NBFCs) and Small Finance Banks bring their offerings to the fingertips of Indian consumers. The growing ubiquity of embedded finance—the integration of financial services into non-financial platforms—is playing a key role. Over the past 18 months, offerings from NBFCs like Bajaj Finance and Shriram Finance, along with a host of Small Finance Banks (SFB) such as Unity, Suryoday, and Utkarsh, have found their way to customers through apps that were once thought of as purely for consumer goods, like Tata Neu, BharatPe, Super.Money and Airtel Money.

This shift is paying dividends. According to RBI data, term deposits at SFB’s grew by 32% YoY from December 2023 to December 2024, far outpacing the 14% growth seen by scheduled commercial banks overall. The growing accessibility of such offerings—via mobile apps that users are already familiar with—has played a role in this surge.

Embedded Finance: A Perfect Storm

While embedded finance is not new, its acceleration in India can be attributed to several key trends converging in recent years:

1. The ‘UPI Generation’ and Covid-19: India’s digital payment ecosystem has