The share of household deposits in India’s banking system declined to 59.3% in FY26 from 63.2% in FY19, reflecting a structural shift in deposit composition as institutional deposits gain ground, according to a report by Crisil Intelligence.
While households remain the largest contributor to the banking system’s deposit base, the report said that financial and non-financial corporations have steadily increased their share of deposits. The combined share of these segments rose to 26.3% in FY26 from 20.5% in FY19, indicating a gradual diversification of banks’ funding sources.
Despite the decline in their overall share, households continue to play a critical role in supporting banks’ low-cost funding base. The report said that households accounted for around 70% of system current account savings account (CASA) balances in FY26, significantly higher than their share in overall deposits.
“The sustainability of banks’ CASA franchise remains closely linked to household savings,” it said, highlighting the continued importance of retail deposit mobilisation for maintaining funding resilience.
The report comes at a time when banks continue to face pressure on the deposit front. Total deposits in the banking system grew 13.5% year-on-year to around Rs 262 lakh crore in FY26, supported by liquidity infusion measures, reduction in the cash reserve ratio and income tax-related benefits. However, credit growth continued to outpace deposit growth, keeping the system-level credit-deposit ratio above 81%.
“The elevated CD ratio highlights the need for banks to strengthen liability franchises to support future credit growth,” the report said. The report also showed a growing preference among depositors for higher-yielding products. The share of term deposits increased to 61% in FY26 from 58% in FY19, while the CASA ratio declined to around 39% from 42% during the same period.
According to the report, the moderation in CASA ratios showed customers’ preference towards higher-yielding deposit products and increasing financialisation of savings.
On the outlook for deposit mobilisation, the report said that the recent regulatory measures to temporarily remove the interest rate ceiling on fresh FCNR(B) deposits of three-to-five-year tenors until September 30, could help banks attract additional foreign currency deposits from non-resident Indians.
“Recent measures by the RBI to encourage FCNR(B) deposit mobilisation are expected to support incremental inflows from non-residents,” the report said.
It added that similar FCNR(B) mobilisation measures announced in 2013 had led to a sharp increase in non-resident deposit inflows and supported foreign currency liabilities and system liquidity. While the current macroeconomic environment differs from that period, the report said that the latest relaxation could provide supplementary support to deposit growth in FY27.
