Indian Banks Deposit Growth Slowdown in FY25

Several Indian banks experienced a year-on-year decline in deposit growth during the fourth quarter of fiscal year 2024-25. Provisional figures indicate that multiple banks reported this decrease. This trend is attributed to banks refraining from offering higher rates on bulk deposits to protect their net interest margins, anticipating a rate cut by the Reserve Bank of India (RBI).

RBI's Influence on Deposit Rates

The RBI's 25 basis points repo rate cut in February and April prompted banks to offer lower rates on maturing deposits. In February, the central bank had lowered the rate to 6.25 per cent from 6.5 per cent—its first cut in nearly five years. The standing deposit facility (SDF) rate has been adjusted to 5.75 per cent from 6 per cent, and the marginal standing facility (MSF) rate to 6.25 per cent from 6.5 per cent.

Increased Reliance on Certificates of Deposit

Banks also increased their reliance on certificates of deposit (CDs) to manage liquidity. According to the RBI, the issuance of CDs grew by 34% YoY to reach an all-time high of Rs 10.58 lakh crore during 2024-25 (up to March 7, 2025).