Core Insights - The weighted average cost of fresh rupee term deposits has increased for the first time in six months, indicating a potential bottoming out of deposit rates and tighter liquidity as credit growth picks up [1][11] - The average rate on fresh term deposits rose to 5.60% in September 2025 from 5.56% in August, marking the first increase since March [2][11] - Analysts suggest that deposit rates are unlikely to decrease significantly from this point due to rising credit growth and competition among banks for funds [10][12] Deposit Rates and Trends - The increase in the weighted average cost of fresh term deposits by four basis points suggests that bank deposit rates may be at their lowest point in the current cycle [1][11] - Fresh term deposits have decreased from a peak of 6.65% in March, influenced by a 100 basis points repo cut by the RBI this year [6][11] - The average outstanding rupee term deposit rate fell slightly to 6.82% in September 2025 from 6.87% in August [9][12] Credit Demand and Competition - An increase in credit demand is contributing to heightened competition among banks for funds, as credit growth is improving following GST rate cuts [7][8][11] - Bankers noted that there has been an uptick in bulk deposit rates recently, which may have contributed to the rise in average term deposit rates [8][11] - Bank margins are recovering after a decline earlier in the fiscal year, with some banks already reporting improvements [9][12]
Deposit rates may have bottomed out, hints RBI data
The Economic Times·2025-11-04 00:41