Banking Sector: Deposits continue to show healthy growth, surge by 18%YoY in Nov'20

December 15, 2020 (MLN): Banking sector deposits continue to show healthy growth during the ongoing year, as the total deposits held by commercial banks clocked in at Rs 16.84 trillion by the end of November 2020, depicting a growth of 18% YoY and 1% MoM.

However, the growth reported a lower number as compared to average of 20% YoY witnessed during the last two months given higher base of Nov-2020, a report by JS global said.

Cumulatively, during 11MCY20, deposits have shown growth of 15% YoY, whereas, during 4MFY21, deposits surged by 4% YoY.

Fresh deposits which were utilized in expanding the Investment portfolio grew by 40%YoY to Rs 11 trillion. As a result of this, banks' investment to deposit ratio (IDR) jumped by 11ppts YoY to 66% in Nov’20. However, compared to previous month, the sector’s IDR remained unchanged.  The investments on monthly basis remained close to the same level of October 2020 with subdued volumes in long-term government auctions during the month.

The demand for fresh disbursements remained muted despite lower interest rates as total advances by commercial banks by the end of  November 2020 broadly remained unchanged at Rs 8 trillion, taking advances to deposits ratio (ADR) down by 8ppts YoY to 48%, while in the previous month it stood at 49%.

According to the report, with the 18% to 20% YoY expected growth in sector’s total deposits for CY20, the sector is expected to continue to park fresh deposits in short term investments during the next month i.e. December 2020.

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