Private banks to report strong deposit growth for March, 2021 quarter

Indian private banks are expected to report robust deposit growth in the March quarter, going by initial numbers announced by three banks. HDFC Bank, IndusInd Bank and Federal Bank have recently reported key business performance indicators, including loan and deposit growth, to stock exchanges. India’s largest private sector lender HDFC Bank said its deposit base rose to about Rs. 13.35 trillion as of March 31, 2021, registering a growth of around 16.3% from a year earlier.

Federal Bank reported provisional total deposits of Rs. 1.72 trillion as of March 31, an increase of 13% from a year earlier. IndusInd Bank also reported strong deposit growth of 27% to Rs. 2.56 trillion at the end of the March quarter of FY21.

While banks are trying to build their deposit base, retail inflation has been eroding returns for savers. However, that has not deterred investors from parking their money in bank deposits. As of March 12, bank deposits stood at Rs. 149.55 trillion, up 12% from a year earlier.

Motilal Oswal, Founder, Motilal Oswal Financial Services Limited, said “Most banks are focusing on garnering deposits (particularly current account and savings account and retail term deposit) to ramp up their liability franchises and reduce dependence on bulk deposits.”

All three banks reported healthy growth in current account and savings account (CASA) deposits in the March quarter. While HDFC Bank’s low-cost CASA deposits grew 27% from a year earlier to Rs. 6.15 trillion in the fiscal fourth quarter, Federal Bank’s CASA deposits expanded 26% to Rs. 58,381 crore.

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