Deposit pricing sparks concerns about banks

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₹2 crore may not be large in number, but it could be a good opportunity for HNIs (high net worth individuals) to move money from debt funds or term deposits to these savings deposits," said Macquarie. “The number of savings accounts with balances in the high-interest bucket (< ₹1 crore- ₹2 crore) and impact on deposit cost could be small," it added. Banks have seen a decline in their share of low-cost Casa deposits in the first half of this fiscal year as customers chased higher returns through fixed deposits.

Yes Bank, for instance, saw its Casa ratio decline to 29.4%, according to provisional numbers as of 30 September, compared with 29.5% as of 30 June and 30.8% as of 31 March. RBL Bank, too, saw its Casa ratio decline to 35.7%, according to provisional figures for 30 September, compared with 37.3% as of 30 June and 37.4% as of 31 March. A survey by Ficci and Indian Banks’ Association (IBA) released on Thursday also showed that 57% of the banks surveyed reported a decrease in the share of Casa deposits in total deposits from January to June.

Among public sector banks, 70% of the banks surveyed reported a drop in the Casa ratio, while among private banks, 56% reported a decrease. “When banks offer 7-8%, customers are using it to arbitrage between savings accounts and liquid funds. Banks do not want bulky savings, and that is why they offer a lower rate on savings deposits of more than ₹2 crore and a higher rate for less than ₹2 crore," said a senior banker with a private sector bank.

Overall, deposit growth has been lagging advances since it started picking up in FY22. That said, deposit growth received support from the Reserve Bank of India’s (RBI’s) decision to withdraw ₹2,000 banknotes from circulation. According to