“Customer behaviour has remained closely aligned with the interest rate cycle. Over the last couple of years, as deposit rates moved to more attractive levels, we observed customers shifting surplus funds from savings accounts into fixed deposits to lock in higher returns. Many customers took advantage of the 7 to 8% deposit rate environment by opting for one-to-three-year term deposits, and even longer tenures. There has been a lock-in mindset among depositors who want to secure higher yields before rates begin to soften,” George said.
For savers, this highlights an opportunity to earn more on idle funds while interest rates remain high. But George notes that customers are also adopting more sophisticated approaches to managing liquidity.
“Products such as sweep in deposits or flexi deposits are gaining popularity because they allow customers to earn higher returns while still retaining access to funds when required,” he said.
He also explained that many depositors are structuring their funds to reduce reinvestment risk.
“Instead of placing a single large, fixed deposit, many prefer splitting funds into multiple deposits with staggered maturities so that they can manage reinvestment risk more effectively if interest rates change,” George said.
Looking ahead, he said, “If the rate cycle begins to ease gradually, we may see customers further balancing their approach by maintaining liquidity in savings accounts while allocating funds across shorter tenure deposits or other fixed income alternatives.”
On the borrowing side, George said retail credit demand remains strong, particularly in housing and vehicle finance.
“Housing loans remain the primary growth driver, supported by urbanisation, improving income levels and sustained demand for residential property, especially in Tier 2 and Tier 3 cities,” he said.
Vehicle financing, including for pre-owned vehicles, is also growing steadily.
George highlighted that personal loans, especially small unsecured ones, require careful assessment.
“While access to credit has become easier through digital channels, some segments of borrowers have taken on higher levels of short-term consumption credit. This requires lenders to be more careful in assessing the customer’s overall borrowing exposure rather than looking at individual loans in isolation,” he said.
On repayment behaviour, George noted that borrowers are largely disciplined.
“Most borrowers continue to treat loan repayment as a priority commitment, which reflects a strong credit culture. Awareness about credit scores and financial discipline has improved significantly among customers,” he said.
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