Wednesday, April 21, 2021
Home India Small Businesses Struggle More Than Salaried Due to Deposits Decline

Small Businesses Struggle More Than Salaried Due to Deposits Decline

Saving bank Accounts Trend Affecting Small Businesses

Small businesses are struggling more than the salaried as seen from current accounts versus savings accounts trends.

According to a report by Kotak Institutional Equities, the ownership data for deposits shows that deposit outflow seen by a few private banks in 4QFY20 has probably reflected in slower market share loss for PSUs with private banks losing market share in government deposits.

Private banks continue to do well especially on household deposits while foreign banks gained current accounts share for the third year in a row.

“Small businesses are likely struggling more than salaried as seen from current account versus savings account growth trends,” the report said.

Follow NewsGram on Instagram to keep yourself updated.

The report highlights the variance in household current and saving deposit growth is a sign of dichotomy. Dissecting the current account deposit growth shows headline growth is driven by corporates whereas the household sector (i.e. SME) with a 35 percent share declined 2 percent year on year. In contrast, household savings deposits (82 percent of overall savings accounts) grew 10 percent year on year compared to 9 percent in FY2018-19, reflecting a steady rise in savings, a trend reflected in household term deposit growth (10 percent year on year) as well.

Small Businesses
Compared to the earlier strong deposit growth in central and eastern regions of India, there is a relatively more even household deposit growth across regions. Unsplash

Government sector deposit growth comprising of central, state, and local governments has slowed considerably to -1 percent and -3 percent in FY2020 and FY2019 after growing at 9 percent and 30 percent in FY2018 and FY2017.

The slowdown is largely driven by term deposits whereas current and saving deposit growth has been flattish. As a result, the share of government deposits is at a multi-year low of 8 percent (vs 10.5 percent in FY2018). Further, private banks lost market share in FY2020, after four years of gain. On their small base, SFBs have maintained market share.

The key insights from RBI’s ownership of deposits report show that Overall deposits grew 9% YoY (vs 10 percent YoY in FY2019), driven by current account deposits growing by 8 percent YoY and savings deposits by 10 percent YoY, while term deposits grew 8 percent YoY.

Follow NewsGram on Twitter to stay updated about the World news.

CASA ratio improved marginally YoY to 41.7 percent with the share of savings deposits at a decade high of 32 percent. The contribution from households was stable at 63 percent, the government sector declined to 12 percent while the private sector improved to 11 percent. The regional distribution shows a marginal loss for metro/urban areas.

Private banks continue to chip away retail deposits but lose share in current accounts. Private banks continued to gain market share in household deposits (albeit slower pace) to 24 percent with significant headroom to grow as PSU banks still maintain a 70 percent share.

Small Businesses
Private banks continue to do well especially on household deposits while foreign banks gained current accounts share for the third year in a row. Unsplash

The pace of CASA market share shift away from PSU banks declined with private banks gaining a small share but relatively bigger gains for foreign banks (~50bps vs 20bps YoY).

At the margin, the share loss was contained in both current and savings account, with private banks losing share in CA and gaining in SA while foreign banks gaining CA share for the third year in a row.

Small Finance Banks have started to make some inroads. They have gained market share, especially in the finance segment (4 percent market share) leading to contribution from this segment at elevated levels at 37 percent compared to 48 percent for households.

Also Read: Should Brands Surrender to Cyberbullying?

Compared to the earlier strong deposit growth in central and eastern regions of India, there is a relatively more even household deposit growth across regions. Metro and urban centers control 75 percent of deposit market share over the past five years, possibly reflecting challenges in rural/semi-urban focused deposit strategy, the report said. (IANS)

STAY CONNECTED

19,507FansLike
362FollowersFollow
1,773FollowersFollow

Most Popular

Covid-19: How Does The Gut Respond To Immunity?

Our guts may not provide long-lasting systemic immunity from Covid-19, which is where immune cells circulate through the body to provide protection to other...

3 Online Master’s Degrees Will Be Offered By JGU And Coursera

O.P. Jindal Global University (JGU) has partnered with Coursera to launch three online masters' degree programs on the learning portal, the varsity said on...

Home Decor Ideas To Revamp Your Space

A new season -- whether summer or winter -- always brings new vibes, new colors, and gives you an opportunity to redo your home...

Discovery: DNA Based Vaccine To Provide Protection Against Current And Future Covid19 Strains

US researchers have developed a novel, low-cost DNA-based vaccine that may not only provide protection against existing variants of coronavirus but also against its...

Machine Learning Program To Identify Covid19 Related Conspiracy Theories

A team of researchers has identified that a new Machine Learning (ML) program accurately identifies Covid-19-related conspiracy theories on social media and models how...

The Night Witches: All-Female Bomber Regiment

By- Khushi Bisht 'The Night Witches' were the all-female pilots of the 588th Night Bomber Regiment of Russia. Joseph Stalin ordered the deployment of three...

The Safest Place In The World To Live In

BY- JAYA CHOUDHARY Living in the modern world is the safest time to be alive in the history of humanity. We can live a better,...

5 Types Of Automated Greeting Cards That Are Good For Business

By Sana Faisal A successful company has happy customers and happy employees. One way to achieve both is by celebrating birthdays, acknowledging special occasions, and...

Recent Comments