SLUG: SLBC REPORT
Ahmedabad: With interest rates offering no major incentive, the growth in bank deposits hit an eight-quarter low in the July-Sep quarter for the financial year 2024-25. However, the amount of deposits grew by over 10% during the same period.
According to the latest State Level Bankers’ Committee (SLBC) report, bank deposits in Gujarat stood at Rs 12.68 lakh crore as of Sep 30, 2024, marking a 10.07% growth compared to Rs 11.52 lakh crore during the same quarter last year. The growth in deposits was 14.72% in the Sep 2023 quarter.
The drop was gradual over the past three quarters, with figures tapering from 15.45% in Dec 2023 to 15.42% in March 2024 and 10.89% in June 2024. Traditional bank deposits, considered a safe investment, now seem to be struggling for investor attention as economic sentiment shifts. This slowdown in deposit growth comes as investors diversify their portfolios to higher-yield instruments.
Sources in the SLBC suggest that the lack of a significant hike in interest rates has nudged depositors to explore alternative options for wealth creation.
“Equities, mutual funds, and gold have emerged as attractive avenues, delivering comparatively higher returns in recent quarters. Gold prices, in particular, have sparkled, luring investors away from low-yield bank deposits. When returns elsewhere are sparkling, bank deposits seem to have lost some of their charm,” said a senior SLBC official, requesting anonymity.
“The investor mindset, increasingly focused on maximising returns, appears to favour instruments that carry a higher risk but promise better rewards. While bank deposits remain a trusted choice for risk-averse investors, the declining growth rate reflects shifting preferences in Gujarat’s financial landscape,” the official further explained.
