SBI Economists Debunk 'Statistical Myth' of Sluggish Deposit Growth

SBI economists refute concerns over slowing deposit growth, terming it a 'statistical myth' as deposit quantum since FY22 exceeds credit growth. The report highlights senior citizens holding nearly half of term deposits and advocates for changes in deposit tax treatment to boost credit growth.

SBI economists have dismissed worries about slowing deposit growth, labeling it a 'statistical myth'. According to their report, the total volume of deposits since FY22 surpasses credit growth, countering narratives of a weakening deposit trend.

The report reveals that senior citizens hold nearly half of term deposits, while the younger demographic seeks higher-yielding investment avenues. The economists suggest changes in tax policy on deposits to enhance credit growth, arguing that current tax treatments hinder deposit accumulation.

Despite a slowdown in deposit growth over the past 26 months, the report expects this to trend to reverse by late 2025. They also acknowledge that new liquidity guidelines could temporarily slow credit growth. The SBI economists propose a more uniform tax treatment on deposits to incentivize savings.