Bank Deposits in India Cross Rs. 100 Lakh Crore Mark!

This is the very first time that India’s banking system reported total bank deposits of Rs. 100 lakh crore in the month of September, and is indicating great achievement of India, although still we have miles to go. This is according to the data released by RBI.

Good Economic Signs:

This will actually result in an improvement of the present economic condition of India. This is actually evident from the fact that the month of September, i.e., the month of this 100 crore mark, recorded demand deposits crossing Rs. 10 lakh crore and time deposits crossing the Rs 90 lakh crore mark. Also this month saw the highest-ever monthly rise, which is of Rs 5.32 lakh crore. If we see the previous year’s records, we find that this is even more than the total deposits in the banking sector 20 years back.

Reasons behind this growth:

There are several reasons for the success of this Rs. 100 lakh crore, the most important factor, being the regular effort form the Government side. The Government has issued several national missions on financial inclusion, the most popular among them, is the Pradhan Mantri Jan Dhan Yojana, i.e. PMJDY. Also, the constant effort of the Government to issue Aaddhar card have played a major role for the opening of the bank accounts, as they acted as an identification card required for the opening of a bank account. The Finance Ministry data also showed that 8.74 crore of the accounts were seeded with Aadhaar and 17.14 crore account holders were issued RuPay cards, which further confirms the contribution of Government for achieving this success.

Should you be happy?:

Undoubtedly, achieving a 100 lakh crore milestone is a very big deal; India still needs to go a long way forward, to make this achievement even bigger as ever. Also, historical data reveals that the deposit growth has considerably slowed down since the last 5 years. While bank’s deposits grew at a CAGR of 12.88% in the last five years, they had grown at a CAGR of 19.9% in the previous five years. This slowing down of pace in the deposit growth was observed to be running parallel with the broad money supply (M3) in the economy. The analysis of this data also suggests that while this broad money grew for several years in the middle of last decade, it has been growing in the sub-teens in recent years.

Hence even though achieving a great success, India needs to further take the necessary steps required to make this a long term success, and maintaining it at the same time.