Private Banks Win Deposits as Rising Rates Hit PSU Market Share

Mumbai, September 12, 2025: As per recently released data by the Reserve Bank of India, private banks are slowly rising up in terms of savings account deposits as compared to the public sector banks (PSUs). A prime contributing factor to this upswing is the rising interest rates. RBI data shows that the share of private banks has increased by 526 basis points, reaching an impressive 30.6% in FY25 as compared to PSUs’ decline by 575 basis points to 61.8%.

Savings Deposits Growth Pattern

In FY25, the savings deposits of private banks increased two folds to reach ₹21 lakh crore while those of PSUs balances rose 54.6% to ₹43 lakh crore since FY19.

Fixed Deposits and Current Accounts Shift

Similarly in terms of fixed deposits the share of private banks surged to 35.3% in FY25 from 28.5% in FY19.

As for the PSU sector banks, it slipped from 64% to 56.6%. In current accounts plus savings (CASA), PSUs saw their share drop to 38.1% in FY25 from 43.9% in FY19. Private banks increased their CASA share to 44.7% from 40.8%

Impact on Margins

This aggressive push for deposits has taken a toll on the profitability of private banks. The average net interest margin (NIM) which was around 5.4% in FY19 has slipped to about 5.2% in FY25. In a sharp contrast, PSU banks have seen significant improvement in their margin from FY19’s 2.51% to 3.12% in FY25.

Role of Rising Interest Rates

This pressure has mounted mainly because of RBI’s rate cycle. The central bank had raised the repo rate by 250 bps during May 2022 to February 2023. It was done to control inflation, which in turn forced lenders to increase deposit rates as well as lending rates. Having held the repo rate at a steady 6.50% through January this year, the RBI began slashing rates from February.

Disclaimer:At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations.