Savings deposit growth slows after Covid as households diversify into equities, MFs: Report

India's savings deposits with Scheduled Commercial Banks (SCBs) have continued to grow steadily over the past 15 years, but the pace of growth has moderated since the Covid-19 pandemic as households increasingly diversify their financial savings into market-linked investment products such as equities and mutual funds, according to a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The report, titled Pattern of Savings Deposits with Scheduled Commercial Banks in India, said the average annual growth in savings deposits slowed to 8.6% during FY2020-21 to FY2024-25, compared with 14.8% during FY2015-16 to FY2019-20. During FY2010-11 to FY2014-15, the average annual growth stood at 14.4%.

ASSOCHAM said the moderation should not be interpreted as a weakening of the banking system or household confidence in deposits. Instead, it reflects a maturing financial ecosystem in which households continue to maintain bank savings while allocating a larger portion of their financial assets to equities, mutual funds and other investment avenues.

Savings deposits

Despite the slowdown in growth rates, the overall deposit base has expanded sharply over the past decade and a half.

According to the report, savings deposits with Scheduled Commercial Banks increased 374%, from ₹13.77 lakh crore in FY2010-11 to ₹65.33 lakh crore in FY2024-25. Over the last 10 years alone, deposits grew 158%, rising from ₹25.36 lakh crore in FY2015-16.

ASSOCHAM attributed this long-term expansion to stronger financial inclusion, deeper banking penetration, rising household participation in the formal financial system and rapid adoption of digital banking services across the country.

Banks dominate savings deposits

Indian banks continue to account for virtually the entire savings deposit market.

The report showed that domestic banks held ₹64.77 lakh crore, or 99.1% of total savings deposits in FY2024-25. Foreign banks accounted for just ₹56,245 crore, representing 0.9% of the total.

Over the last 15 years, deposits with Indian banks have grown 384%, while foreign banks recorded a cumulative growth of 49%. Consequently, the share of Indian banks in total savings deposits increased from 97% in FY2010-11 to 99.1% in FY2024-25, while the share of foreign banks declined from 3% to 0.9%.

Household savings

The chamber said changing household investment behaviour has been a key reason behind the moderation in savings deposit growth.

Citing the Economic Survey 2025-26, the report noted that India's retail investor base expanded from around 3.1 crore in FY20 to more than 11 crore by FY25, highlighting growing participation in equity markets.

RBI data also showed that the share of equity and investment funds in total household financial assets rose from 15.7% in March 2019 to 23% by March 2025. At the same time, assets managed by mutual funds increased from less than 10% of GDP in the early 2010s to 23% of GDP by FY26 (as of November 2025), crossing ₹80 lakh crore.

Policy support remains strong

The report said several policy initiatives have contributed to sustained deposit mobilisation over the years. Financial inclusion programmes launched since 2014 expanded access to banking services, while demonetisation in 2016 encouraged greater formalisation of household savings, resulting in a 34% year-on-year rise in deposits with Indian banks in FY2016-17.

The Covid-19 pandemic also strengthened precautionary savings behaviour, leading to a 16.1% increase in savings deposits during FY2020-21.

Looking ahead, ASSOCHAM said India's savings deposit base remains large and resilient. Continued financial inclusion, wider adoption of digital banking, supportive regulatory measures and sustained household participation in the formal financial sector are expected to strengthen bank deposits even as investors continue to diversify into market-linked financial products.