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Smart FD Investment Strategy: People in India are now completely changing the way they keep money in their bank accounts. New figures from the Reserve Bank of India show that there has been a big change in the last five years. A large number of depositors have started withdrawing money from low interest savings accounts. Now they are investing their money in term deposits giving higher returns.

This change has seen a major change in the structure of bank deposits in the country. The share of savings in total bank deposits has declined from 34.6 percent in March 2022 to 28.7 percent in March 2026. In contrast, the share of term deposits has increased from 55.2% to 61.6% during the same period. This shows that customers are locking their money for a fixed period of time.

Main reason for low interest rate and decreasing purchasing power on savings bank account

The steep decline in savings bank rates was much steeper during 2025-26. Banks have continued to offer attractive rates for raising resources. The largest bank SBI is giving only 2.5% interest on savings account. Savings bank rates have fallen to around 6-7% in the last ten years.

SBI offers 6.25% interest on one year FD and 6.45% interest on two year deposits. HDFC Bank is also offering 6.25% on one year FD. Real returns are negative when the savings bank rate is lower than retail inflation. Due to this, the purchasing power of the money kept in the bank reduces significantly over time.

The current savings rates of banks are about 100 basis points lower than April’s inflation level of 3.48%. As of May 15, 2026, the demand deposits of the banking sector were Rs 31.65 lakh crore. During the same period, term deposits were at a high level of Rs 225.23 lakh crore. Customers do not get any kind of interest on current account.

Increasing share of households and dominance of large FDs as the main source of deposits.

The data shows that households remain the main part of India’s deposit base. Savers are increasingly preferring fixed deposits over traditional savings accounts. Due to this, the liabilities of banks are changing and the role of fixed deposits is becoming much stronger.

The share of households in banks stood at 59.3% at the end of March 2026. Households are increasingly adopting mutual funds and equities as preferred investment options. Deposits from the non-financial sector have increased from 17.7% to 18.5%. Deposits from financial corporations have increased from 6.8% to 7.8%.

As of March 2026, 46.3% of deposits were Rs 1 crore and above. Deposits above Rs 5 crore alone accounted for 34.8% of total deposits. On the other hand, deposits up to Rs 5 lakh were only 17.8%. The share of senior citizens in bank deposits was 20% in March 2026.

Excellent contribution of public sector banks in mobilizing deposits and excellent future trends.

By the end of March 2026, deposits in commercial banks have grown at the rate of 11.5% year-on-year. This impressive growth was recorded at the rate of 10.6% a year ago. Bank branches across all population groups recorded double-digit deposit growth during the year.

Public sector banks have been at the forefront in mobilizing deposits during FY26. These banks accounted for 50.8% of the incremental deposits raised by the system. Private sector banks have made a major contribution of 38.6%. This shows that they have also played an important role.

The share of term deposits with less than 7% interest has increased to 61.8% in March 2026. Term deposits with maturity of one to three years have reached 69.8%. The share of deposits held by regional rural banks has declined to 2.9% from 3.2% four years ago.