Even as bank deposits and credit have recorded a sharp expansion over the past decade, the pace of growth in investor participation has outstripped the rise in traditional savings. At the same time, unclaimed deposits have surged at an alarming rate, according to a research report from the State Bank of India (SBI) on trends in the Indian banking sector.
The report highlights three key structural shifts: investor participation between FY19-20 and FY24-25 has grown faster than bank deposits over the same period, unclaimed deposits have witnessed an exorbitant upsurge and although deposits and advances have nearly tripled since FY14-15, early signs of a slowdown are visible in metro centres even as rural, semi-urban and urban areas continue to show traction.
SBI's district-wise concentration indices reveal that the top ten districts hold around 43% of deposits and 49% of credit. "While the top 100 districts hold deposits of 75% and credit of 77%, the rest of the 643 districts hold business of around 25%. The top-25 districts of deposits, which are not among the top-25 credit districts, include Nagpur, Patna, North 24 Parganas, and Thiruvananthapuram. Similarly, there are four districts, Chandigarh, Indore, Ludhiana and Raipur, which are in the top 25-credit districts but not in the top 25-deposits districts.
Investor Participation Grows Faster Than Deposits
SBI’s analysis shows that while household financial savings continue to flow into bank deposits, the relative acceleration in investor participation, driven by equities, mutual funds and other market-linked instruments, has been significantly higher during FY19-20–FY24-25.
The report notes that rising financial literacy, easy access to digital trading platforms, sustained market returns and a prolonged low-interest-rate environment during part of the period encouraged households to diversify away from plain savings accounts and fixed deposits. As a result, although the absolute size of bank deposits increased, the growth momentum in investor participation outpaced deposit accretion.
This trend, SBI observes, reflects a gradual but clear shift in household preference from traditional savings to higher-yield financial instruments, particularly among younger and first-time investors. The widening investor base has important implications for banks, as it can affect the long-term composition and cost of deposits, especially in an environment of rising credit demand.
Unclaimed Deposits See Sharp and Worrying Rise
One of the most striking findings in the report relates to unclaimed deposits, which have recorded what SBI describes as an 'exorbitant upsurge' in recent years. The number of accounts with unclaimed deposits has risen from about 1 crore in 2005 to 2.1 crore in 2015 and further to 20 crore in 2024. A similar trend is visible in value terms, with the amount of unclaimed deposits increasing from Rs918 crore in 2005 to Rs6,835 crore in 2015 and surging to Rs62,314 crore in 2024. This indicates that both the volume and value of unclaimed deposits have increased by more than nine times since 2015, underlining a growing systemic issue rather than a marginal anomaly.
A closer look at the composition of unclaimed deposits in 2024 reveals that savings accounts account for 75% of the total amount, followed by other deposits at 16%, fixed deposits at 4%, and current accounts at 5%. Bank-wise, public-sector banks (PSBs) hold the overwhelming share of unclaimed deposits at 82%, while private sector banks account for 9%, foreign banks for 3% and regional rural banks for 6%. The data also notes that savings bank accounts alone contribute about 75% of the unclaimed amount, highlighting gaps in account tracking, nomination and customer engagement, particularly within the public sector banking system.
Unclaimed deposits typically arise from dormant accounts, deceased depositors without claims from legal heirs, or a lack of updated know-your-customer (KYC) and contact details. The report highlights that, despite repeated regulatory measures and awareness drives, the volume of such deposits continues to increase, indicating structural and procedural gaps in account management and customer engagement.
SBI cautions that rising unclaimed deposits not only lock household savings out of productive use but also raise governance and consumer protection concerns. The trend underscores the need for stronger depositor awareness, improved nomination coverage, timely KYC updates and proactive outreach by banks to trace rightful claimants.
Deposits and Credit Triple over a Decade
The report shows that India’s banking system has witnessed a massive balance sheet expansion over the last ten years. Aggregate deposits rose from ₹85.3 lakh crore in FY14-15 to ₹241.5 lakh crore in FY24-25. Advances also increased from ₹67.4 lakh crore to ₹191.2 lakh crore during the same period.
As a result of this parallel expansion, the credit-deposit (C-D) ratio stood at 79% in FY24-25, indicating robust credit off-take alongside deposit mobilisation. SBI notes that the elevated C-D ratio reflects strong demand for loans from households and businesses, supported by economic recovery, infrastructure spending and improved asset quality across banks.
Rural and Semi-urban Traction, Metro Slowdown
A closer look at population group-wise data reveals diverging trends in the recent period. According to SBI, rural, semi-urban and urban centres have continued to show significant traction in both deposits and credit growth. These segments have benefited from government spending, higher agricultural incomes, MSME credit flow and financial inclusion initiatives.
In contrast, metro centres recorded a decline in both deposit and credit growth during the first half (H1) of FY25-26 compared to H1FY24-25. SBI attributes this moderation to a higher base effect, changing saving and investment behaviour among urban households and a possible reallocation of surplus funds towards capital market instruments rather than bank deposits.
The report suggests that while metro regions remain critical for banking volumes, incremental growth is increasingly being driven by non-metro geographies. This shift has implications for branch expansion strategies, digital banking penetration and product offerings tailored to semi-urban and rural customers.
Implications for Banks and Policymakers
SBI’s assessment indicates that the Indian banking system is entering a phase of structural transition. Faster investor participation growth relative to deposits signals changing household financial behaviour, while the surge in unclaimed deposits raises red flags on consumer awareness and systemic efficiency.
At the same time, the sharp rise in deposits and advances over the past decade underscores the resilience and depth of the banking sector. However, the emerging metro slowdown and high C-D ratio point to the need for careful liquidity management, competitive deposit pricing and renewed focus on customer retention.
The report concludes that sustaining deposit growth, addressing the issue of unclaimed funds and adapting to evolving investor preferences will be critical for banks as credit demand remains strong and financial markets continue to deepen.
