SBI chairman CS Setty | Photo credit: PTI
His comments come against the backdrop of bank deposit growth lagging behind credit growth. Banks overcome this discrepancy by raising funds through the issuance of short-term certificates of deposit (CD), participating in open market operations (OMO) purchase auctions of government bonds, among others.
“But there are tax limitations to that (providing favorable tax treatment)… and globally we have not seen anywhere where bank deposits are given special treatment.
“But at the same time, equity instruments are also not getting special treatment in many jurisdictions. So in an evolving equity environment, these benefits were probably justified,” he said on the sidelines of the launch of SBI’s CHAKRA’ – Center of Excellence (CoE) for financing sunrise sectors.
On January 26, 2026, the year-on-year growth of all mainstream banks at 10.61 percent was 237 basis points lower than the credit growth of 12.98 percent. A level playing field in tax treatment could help banks mobilize deposits.
According to the latest Economic Survey, the composition of household financial savings in India has undergone a significant shift over the past decade, indicating a deeper reconfiguration in the way households allocate additional financial resources.
This transition has been characterized by a gradual but sustained move towards market-related instruments, especially equities, which reflect both structural changes in the financial system and the changing risk preferences of households.
“The share of equities and mutual funds in annual household financial savings has increased from ~2 per cent in FY12 to over 15.2 per cent in FY25. This shift has coincided with a steady increase in SIP contributions… The growing prevalence of systematic investments reflects a shift towards long-term and sustainable household involvement, channeling savings in a disciplined manner across market cycles,” the Survey said.
In contrast, the share of deposits fell from over 58 per cent in FY12 to around 35 per cent in FY25, after declining to just 31.9 per cent in FY22.
The survey shows that this pattern indicates portfolio diversification rather than relocation, with households adding their equity exposure to their existing savings rather than replacing it entirely with traditional instruments.
Published on January 31, 2026
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