Fearing lockdown, Indians saved more: SBI report
SBI study reveals that the pandemic has prompted people to step up savings despite a fall in interest rates
People have put more money in the bank in March-April 2021 than what did they in the comparable period last year, according to a report by State Bank of India.
Compared to 2020, the deposits in banks in these two months have gone up by more than 30% — from Rs 2.54 lakh crore to Rs 3.54 lakh crore — the study revealed.
Deposit numbers
In March-April 2020 the savings and term deposits throughout the country stood at Rs 1,24,750 crore and Rs 1,47,100 crore. Both put together amounted to Rs 2,71,850 crore.
In March and April 2021 these figures are supposed to go up to Rs 1,79,600 crore (savings) and Rs 1,74,300 crore (term deposits). The cumulative savings amount in these two months would stand at Rs 3,53,900 crore, i.e. more than 30% increase over the same period of 2020. (For April 2021, SBI has taken the figures up to April 15 and made a projection for the rest of the month)
“In March-April this year huge monthly incremental increase in deposits was observed particularly in time deposits. As people think of another lockdown, and for their future they are giving more emphasis on savings. Besides people have fewer options to spend if nation-wide lockdown will take place,” read the report compiled by the chief economic advisor.
Dip in rates
The interest rate in savings account and term deposits were pruned on May 31, 2020. The range of reduction was between 25 and 35 basis points.
Currently, almost all banks offer interest rates in savings accounts between 2.7% and 3.5% for below Rs 1 lakh deposit.
For more than Rs 1 lakh deposit the rate is 25-30 basis points higher. On the other hand, for any term deposit the interest rate general varies from 3.5% to 5.5%.
It was also slashed in May 2020 by 20-30 basis points depending upon the time duration of the deposit.
Last year, full lockdown was imposed throughout the country from end-March.
This year from the first half of April the COVID 19 surge has assumed such a scale that several states have imposed night curfew or partial lockdown already.