In FY20, SBI’s total deposits grew 11.34% year-on-year (y-o-y) — faster than the banking system’s growth of 7.9% — to Rs 32.42 lakh crore from the previous year’s level of Rs 29.11 lakh crore.

State Bank of India (SBI) grew its market share in deposits by 46 basis points (bps) to 22.84% at the end of FY20, despite cuts in interest rates, the bank said in its annual report for the year. In February and March, SBI had effected two rounds of cuts, taking interest rates on fixed deposits (FDs) to levels not seen since 2004. The savings rate, too, took cuts in FY20, falling first to 3.25% in November and then 3% in March.

In FY20, SBI’s total deposits grew 11.34% year-on-year (y-o-y) — faster than the banking system’s growth of 7.9% — to Rs 32.42 lakh crore from the previous year’s level of Rs 29.11 lakh crore. The foreign offices’ deposits grew by 20.45% to Rs 1.17 lakh crore, while domestic deposits grew by 11.03% to Rs 31.25 lakh crore. Term deposits grew at 12.23%, while current account savings account (CASA) growth stood at 9.61%. SBI’s CASA ratio was at 45.16% in FY20.

In the first quarter of FY21, deposit rates have slid further, with the savings rate down to 2.7% at SBI and that for a one-year FD at 5.1%. The bank is not too concerned about lower rates hitting its deposit franchise. SBI chairman Rajnish Kumar said earlier this month that deposit rates should stabilise at the current levels for some time. “But, if there is a further rate cut then we would have no choice but to cut the rates. Deposit flow is very, very strong,” he added.

The operating environment in the banking system has also aided the migration of deposits from smaller private banks to the large lenders, especially SBI, say analysts. In a recent report, India Ratings and Research said that the profile of banks that are accruing fresh deposits is undergoing a change rapidly. “This is clearly visible in terms of flight to quality and safety, with AAA-rated banks witnessing increased deposit accretion rates, both on qoq and yoy bases. The agency expects this to continue in the near term with new-age private banks, regional banks and SFBs (small finance banks) mostly slowing down, as safety has come at the forefront after the events that played out with PMC Bank and thereafter Yes Bank,” India Ratings said.

Over the medium to longer term, while new-age private banks, regional banks and SFBs could regain their momentum partly, the dominance of banks with strong franchise and large geographical spread would continue, given the higher safety and peace of mind that they offer to their deposit customers, the agency added.