Share of term deposits below 7% jumps as banks reprice liabilities

Mumbai: The share of bank term deposits earning less than 7% rose to 61.8% in fiscal 2025-26 from 27.3% a year earlier, signalling a repricing of liabilities following cumulative policy rate cuts of 125 basis points since February 2025, Reserve Bank of India data showed. Deposits with a tenure of up to one year fell to 8.8% from 16.7% over the same period, as depositors shifted towards longer maturities in search of better returns, the data showed.

Deposits with a maturity of one to three years rose to 69.8% at end-March 2026 from 50.4% in March 2022, suggesting depositors increasingly locked in funds for medium tenures amid evolving rate expectations.

The data also pointed to broader structural shifts in deposit composition, with the share of term deposits in overall deposits rising to 61.6% in March 2026 from 55.2% in March 2022, while the proportion of savings deposits declined to 28.7% from 34.6% in the same period.

Deposit growth accelerated to 11.5% year-on-year at end-March 2026 from 10.6% a year earlier, with public sector banks accounting for 50.8% of incremental deposits and private banks contributing 38.6%.

Households remained the largest contributors, accounting for 59.3% of total deposits, even as the share of non-financial entities and financial corporations edged up, indicating gradual diversification in deposit sources.

Large-value deposits continued to dominate, with term deposits of ₹1 crore and above accounting for 46.3% of the total. Deposits of ₹5 crore and above alone made up 34.8%, while deposits of up to ₹5 lakh accounted for 17.8%.

The share of senior citizens in deposits stood at 20% and has remained broadly stable over the past four years, the central bank data showed.