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Nearly 45 per cent of bank deposits mature within one year — spread over different tenors from as short a period as one day to one year. This is visible from the deposit maturity pattern of a couple of top banks across both public and private sectors.
The implication for all banks in the current scenario is that their cost of deposits is going to go up as they start re-pricing them at higher levels. Deposit growth has been moving up to about 18 per cent recently.
Although a significant portion of deposits in the system is short-term, bank depositors seem to prefer putting their money in the 1-3 year deposits.
Tenure pattern
Five top public sector banks whose deposits account for a little over Rs 20 lakh crore (or about 40 per cent of the total banking deposits), had about 26 per cent of their deposits in the 1-3 year category. For four top private banks, the corresponding figure was nearly 40 per cent. The depositor preference for medium-term deposit has remained more or less similar during the last decade.
As for long-term deposits, public sector banks seemed to enjoy a higher share with about 29 per cent of their deposits coming in the above-3-year category. For private banks that was relatively lower at 17 per cent.
One explanation for this phenomenon is that private banks have generally steered clear of long-term exposures and, therefore, don't feel the need to raise long-term money. A slightly harsher view could be that the depositing public still hasn't developed the confidence to put their money in long-term deposits of private banks.
The residual maturity pattern of deposits given by banks also throws up some more interesting nuggets. For instance, Bank of India had 5.4 per cent of its deposits maturing within a day of the balance-sheet date of March 31, 2011. This was significantly above the average for the sector.
This could possibly be explained as a consequence of raising very short-term deposits from corporates, public sector undertakings and government departments.
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