More savers ditch bank deposits to flirt with equity
savings account (CASA) deposits — can no longer be taken for granted with the average urban saver increasingly tilting in favour of higher-yielding Dalal Street instruments, such as mutual fund plans and direct stock ownership.
And the already visible struggle for deposits could intensify further for the industry with the biggest index weighting — and overseas ownership — as democratisation of technology and familiarity help lift the veil on the hitherto opaque and esoteric world of D-Street for the average rural saver, fundamentally altering the dynamics in the handling of financial savings to the detriment of high-street banks.
At the system level, CASA ratio of all commercial banks put together is 40.5% as of September 2023, compared with 43.1% in March 2023 — and down from 45.2% at the end of March 2022. That translates into a decline of nearly 5 percentage points in 18 months.
To be sure, CASA ratios may also have fallen because of the rise in bank fixed deposit rates. State Bank of India's (SBI's) CASA ratio slipped 330 basis points year-on-year to 41.18% as on 31 December 2023. One basis point is 0.01 percentage point.
«There has been a shift in the savings pattern, especially in the metros, where banks used to get most of their large deposits from,» said P R Rajagopal, executive director, Bank of India." Thanks to digitisation, these savers have access to other savings products, such as mutual funds, denting banks' ability to garner deposits."
Latest Association of Mutual Funds in India (AMFI) data
