State Bank of India has reintroduced retail term deposit scheme ‘Amrit Kalash’ of 400 days tenure at 7.10 per cent interest rate.

The scheme is available from April 12, 2023 till June 30, 2023. Senior citizens will get additional interest of 50 basis points on the scheme.

India’s largest bank had first floated this scheme on February 15, 2023. It was valid up to March-end 2023.

Lagging credit growth

This scheme comes at a time when banking system’s deposit growth is lagging credit growth. As of March 24, 2023, the banking system’s deposit growth was at 9.6 per cent year-on-year (y-o-y) against credit growth of 14.5 per cent y-o-y.

Term deposits accounted for 55.51 per cent of SBI’s domestic deposits of ₹40,48,149 crore as at December-end 2023.

SBI’s domestic deposits and domestic advances grew by 8.86 per cent and 16.91 per cent, respectively, y-o-y as at December-end 2022.

Bank of Baroda’s economic research team, in a report, said, in FY24 growth in deposits should be higher while that in credit marginally lower which should assuage the liquidity situation.

Therefore, the picture should be steady going ahead with rates probably tending to move downwards than upwards given that inflation projections for FY24 are in the 5-5.5 per cent band, it added.