Loans outpace deposits for 3rd yr in a row

In the past three financial years, Indian households took more money from banks as loans than they invested as deposits.

- SACHIN P MAMPATTA

Money deposited by households was equivalent to 4.5 per cent of gross domestic product (GDP) in the nine months ending December 2023, shows data from a March 19 Motilal Oswal Financial Services 'EcoScope' report. While bank loans were equivalent to 4.9 per cent of GDP.

The report, authored by research analysts Nikhil Gupta and Tanisha Ladha, also said that it wasn't a recent trend. Deposits grew at a slower pace than the loans in the first nine months FY23 and FY22 also.

It has pushed India's household debt to a new high, the report added.

Deposits have grown from 3.3 per cent of GDP in the first nine months of financial year 2020 (9MFY20) to 4.5 per cent of GDP in the first nine months of FY23. While bank loans have risen from 2.9 per cent of GDP to 4.9 per cent of GDP over a similar period.