Archive · 19 Nov 2025
Indian Banks Face Deposit Crisis Amidst Structural Shifts
Indian banks are having trouble getting deposits, which makes it harder for them to lend money.
This is because people are using digital payment methods like UPI and keeping their money in mutual funds instead of bank accounts.
Banks are trying to find new ways to get low-cost deposits, like creating new types of accounts and using technology to track money movements.
Deposit growth lags credit expansion in Indian banks
Low-cost current and savings accounts (Casa) inflows are shrinking
Rising funding costs impact banks' net interest margin (NIM)
Structural shifts driven by UPI, e-Kuber, and digital savings trends
Mutual funds and equities are drawing funds away from banks
- Who
- Indian banks
- What
- are facing a deposit crisis due to structural shifts
- When
- in recent months
- Where
- in India
- Why
- due to factors like the growth of digital payments, shifts in household savings, and changes in government money management policies
Banks
Customers & Government
Deposit Growth
Banks
Deposit growth is lagging behind credit expansion
Customers & Government
Customers are shifting funds to mutual funds and digital savings
Funding Costs
Banks
Rising funding costs impact banks' net interest margin (NIM)
Customers & Government
Government's efficient fund management reduces low-cost deposits
- Deposit Growth (YTD)
- 5.8% (current year) vs 6.5% (last year)
- Credit Growth (YTD)
- 5.3% (current year) vs 4.9% (last year)
- Mutual Fund AUM Growth (Last Decade)
- 32% (current) vs 12% (earlier)
- Bank Deposits Growth (Last 5 Years)
- 70%
- UPI Transaction Volume
- 99%
- UPI Transaction Value
- 97%