Investors renew faith with bank deposits.

Volatile stock markets and a hefty import duty as well as other restrictions on gold seem to have once again made investors wary. Add to this mix, a depreciating currency, softening inflation and concerns over get-rich-quick chit funds that have rocked a number of states. But with the financial shake-up, investors seem to be running to the good old bank deposits for security.

On Thursday, the country's largest lender — State Bank of India reported a near 60 per cent rise in bank deposits so far this fiscal. In absolute terms, the bank's deposit growth till now has been Rs 41,000 crore as against Rs 26,000 crore it had notched up in the same period last fiscal.

The data, which came after the bank registered negative growth in bank deposits in the last two quarters, surprised even the bank's chairman Pratip Chaudhuri who called it a "flight to safety".

"In many parts of the country, many (ponzi and bogus) schemes are not able to redeem their deposits. So then SBI becomes a beneficiary," Chaudhuri said in a recent interview.

In an indication that this trend is not restricted only to one particular bank, the Reserve Bank of India too has reported a 13.4 per cent rise in deposit growth at Rs 62,000 crore year on year on 31, which is largely in line with its 14 per cent growth target in the segment for the whole fiscal.

This pick up in deposit growth is despite the fact that most banks have begun to lower deposit rates, at least in the bulk segment.

For instance, the State Bank of India had recently cut deposit rates by 25 basis points on two tenors.

Analysts too have expressed surprise at the recent development, as typically bank deposits like most other small savings schemes and insurance products tend to register a growth only towards the second half of the fiscal.

Source : indianexpress.com