Bank FD tally in Q3 falls to 2-year low, total deposit base growth also slips

By

Sachin Kumar

, ET BureauLast Updated: Mar 31, 2026, 06:06:00 AM IST

Synopsis

Bank fixed deposit growth slowed to a two-year low in the December quarter. Private banks led deposit collection. This slowdown may increase funding costs for lenders. However, current and savings account deposits saw improved growth. Experts predict a shift back to fixed deposits due to geopolitical events.

ET Intelligence Group: Fixed deposit accretions by banks fell to a two-year low of ₹3.2 lakh crore in the December quarter. It was the lowest tally since the December 2023 quarter, when collections were ₹3.1 lakh crore, according to RBI data. Private sector banks led deposit mobilisation, garnering ₹1.8 lakh crore or about 56% of total fixed deposits. A sustained slowdown in fixed deposit accretion may raise cost of funds as lenders may be forced to offer higher interest rates to attract term deposits amid strong credit demand.

The total deposit base of the banks also showed deceleration, growing by 11% year-on-year to ₹149 lakh crore at the end of December compared with the 14% growth recorded in the year-ago quarter.

Agencies

Cost of Funds Could Go Up: Lenders may be forced to offer higher interest rates to draw term deposits in case of a sustained slowdown in FD accretions

Fixed deposits were the only major deposit category to report a slowdown. Growth momentum improved in current and savings account (CASA) deposits, which grew 9% to ₹90.8 lakh crore in the December quarter, higher than 6% growth in December 2024 quarter. Savings account balances rose 8% to ₹69.4 lakh crore, accelerating from 5% growth a year earlier. Current account deposits also expanded at a faster pace, growing 10% year-on-year to ₹21.4 lakh crore compared with 9% growth a year ago.

Overall bank deposits grew 10% year-on-year to ₹239.8 lakh crore at the end of December, marginally slower than the 11% growth recorded in the year-ago quarte. Fixed deposits dominate the deposit mix, accounting for 62% of total deposits as of the December FY25 quarter. Savings accounts made up 29%, while current accounts comprised the remaining 9%.

Sector experts anticipate a renewed shift by savers toward FDs. "The West Asia conflict has abruptly altered market dynamics, prompting a part of retail households to pivot away from equities toward conventional, lower-risk instruments such as bank term deposits," Soumyajit Niyogi, director - core analytical group at India Ratings, told ET.

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