SBI study shows rural areas have more accounts, but far less deposits than cities

Banking landscape in India has changed a lot in the last one decade, especially after the launch of PM Jan Dhan Yojona. The flagship financial inclusion scheme has brought a large number of people under the banking system. A recent study by State Bank of India shows rural India has the highest number of savings bank accounts, but they have low average deposit compared to the accounts in the urban branches. India has the largest customer base along with highest deposit across the world. The SBI study has interesting facts about how the Indian savings accounts category is evolving.

More accounts in rural India

Until March 2020, India had the largest number of savings accounts across the world. According to the study, India has a total 173 crore savings bank account, of which 63.6 crore are in rural areas. Out of these 63.6 crore accounts, more than 50% accounts are under PM Jan Dhan Yojona. It proves that this scheme has a very big impact on the Indian banking industry, particularly in the rural India.

The population of India is currently approximately 135 crore.

More than Rs 1.46 lakh crore was mopped up through this flagship scheme of the current government.

Besides the rural segment, there are three different categories semi urban, urban and metropolitan area in the banking system. The total number of savings accounts in these areas stood at 54 crore, 27.1 crore and 28.3 crore, respectively.

In value terms, rural India has more than double savings account holders than the metropolitan cities, mentioned the SBI study.

Amount deposited

The study reveals that in these 173 crore savings accounts, the total amount of money deposited stood at Rs 45.25 lakh crore till March 2020.

The metropolitan segment stood a distant first with almost Rs 16.5 lakh crore deposits. Urban and semi urban area mopped up Rs 10.3 lakh crore and Rs 10.4 lakh crore respectively. Rural area’s collection is just above Rs 8 lakh crore, which is half of the savings amount of metropolitan area.

Metropolitan area deposit

If we go for the average balance — the total amount divided by the number of accounts — the metropolitan area stood first with average balance of Rs 58,021. On the other hand, the average balance is Rs 12,677 per account in the rural areas.

In value terms, metro cities of the country have deposits that are almost five times higher than that in rural India. However, the urban have average balance of Rs 37,900 and just half of that amount, i.e. Rs 19,247 per account for semi urban area.

Interest income very low

All these savings account-related figures are fascinating, but when it comes to interest earnings, the picture gets really grim.

In this study, 3% annual interest income is considered in savings bank account. Naturally savings accounts from metropolitan area earn highest interest, Rs 49,000 crore, followed by urban and semi urban area, Rs 31,000 crore each and Rs 24,000 crore from rural areas.