An analysis of the deposit performance of scheduled commercial banks in India 2001–2011

The primary business of commercial banks is to mobilize the savings of the community and channelize these into the commercial and government sector by way of credit and investment. This paper presents the comparative performance of the major bank groups, viz. Public Sector Banks, Private Sector Banks and Foreign banks with regard to deposits and analyzes the patterns in their behaviour. The three bank groups are compared with respect to growth of aggregate deposits, share in total scheduled commercial bank deposits, and growth of low-cost CASA deposits. The paper finds that the growth performance of deposits has been extremely erratic, particularly in the case of private sector banks and foreign banks. The post-crisis growth of Public Sector Bank deposits has been better than that of the other two bank groups. Overall deposit growth slowed down since 2008 despite rising interest rates, suggesting that the very high rates of inflation were eroding the incomes of the public, reducing their ability to save, and also forcing savings into traditional anti-inflation hedges like gold and real estate. Foreign banks outperform their Indian public and private sector counterparts in the matter of mobilization of low-cost deposits.