Growth in bank deposits in 2017-18 fell to a 5 decade low of 6.7 percent. Investors today are lured by alternative money-saving instruments like mutual funds, insurance and equity investments, hampering the banking industry's business.
As per the data on the Indian central bank - RBI's (Reserve Bank of India) website, the aggregate deposit made in banks grew by just 6.5 percent in the financial year 2017-18, which is the lowest since 1963.
Reports say that the reverse growth could be due to significant deposits during the demonetization period that pushed the growth in 2016-17 higher. In the November-December 2016 period alone, banks received 15.28 lakh crore in deposits from Rs 500 and Rs 1,000 notes. This resulted in a 15.8% annual growth at the end of March 2018 to Rs 108 lakh crore.
Despite higher deposits in 2017-18 in terms of aggregate (Rs 114 lakh crore), the pace of growth was lowered (6.7 percent). Though demonetization could be to blame, the movement of savings from traditional means to alternate methods like mutual funds was also been observed to be higher, aiding the decline in deposits.
The total mutual fund assets in March 2018 was reportedly increased by 22 percent to Rs 21.36 lakh crore from Rs 17.55 lakh crore in March 2017.