All Scheduled Banks (ASBs) collectively received about 2.75 times more deposit inflows in the first five months of the current financial year at ₹6,09,763 crore against ₹2,21,737 crore in the year ago period.
This deposit jump comes despite drastic deposit rate cuts as savers preferred the safety of bank deposits vis-a-vis investments in other financial assets.
Credit outstanding of ASBs’ fell by ₹1,64,019 crore in the period against a decline of ₹83,827 crore in the corresponding period last year. This was mainly due to the COVID-19 pandemic bringing the economy to almost a grinding halt, which in turn had deleterious effect on credit demand.
Due to lack of credit appetite, banks invested a whopping ₹6,81,453 crore in central and state government securities against ₹1,99,188 crore in the year-ago period.
According to the Reserve Bank of India’s “Scheduled Bank’s Statement of Position in India”, in the fortnight ended August 28, 2020, ASBs deposits jumped by ₹95,126 crore while their credit declined by ₹8,354 crore. However, their investments in central and state government securities rose by ₹40,803 crore during the fortnight.