From savers to investors: Indian households drive significant banking system expansion, says SBI

New Delhi: India’s banking sector has witnessed strong expansion over the past decade, with bank deposits and advances nearly tripling between FY15 and FY25, signalling deeper financial penetration and renewed credit growth, according to a new report by SBI Research.

Deposits rose from ₹85.3 lakh crore to ₹241.5 lakh crore, while advances increased from ₹67.4 lakh crore to ₹191.2 lakh crore during the ten-year period, reflecting stronger banking activity and greater participation of households in the formal financial system. The share of bank assets in GDP has also improved, rebounding from 77 per cent to 94 per cent by FY25, indicating financial deepening.

The report highlights a key structural shift, noting that Indian households are increasingly moving from traditional savings to financial investments. States such as Gujarat, West Bengal, Madhya Pradesh, Andhra Pradesh and Karnataka are seeing deposits shift more rapidly towards financial markets between FY20 and FY25.

Over the longer FY5–FY25 period, deposits surged from ₹18.4 lakh crore to ₹241.5 lakh crore, while advances grew from ₹11.5 lakh crore to ₹191.2 lakh crore, marking a significant scale-up in the Indian banking system. The Credit–Deposit (C–D) ratio has also strengthened, rising from 69 per cent in FY21 to 79 per cent in FY25, signalling faster credit growth than deposit growth.

The report further notes that public sector banks are gradually regaining market share in lending, following years of decline, supported by balance sheet repair, improved profitability and renewed lending appetite.

During H1 FY26, scheduled commercial banks recorded incremental deposit growth of ₹8.1 lakh crore, compared to ₹8.6 lakh crore in the same period last year, while credit growth increased to ₹7.6 lakh crore from ₹7.4 lakh crore.

A recent industry assessment attributes rising PSB profits to higher fee income, treasury gains, retail and MSME credit growth, and normalised operating expenses. Profitability is expected to improve further in H2 FY26, supported by festive demand, continued loan expansion, lower CRR requirements and easing stress in unsecured and microfinance segments.

IANS