SCBs’ deposit growth in semi-urban and urban areas, too, is behind the average increase across population groups, with their deposits growing 22 times and 26 times, respectively, in the last 25 years
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PRASHANTH VISHWANATHAN
Giving loans to “Bharat” (rural India) and mobilising deposits from it seems to have proved relatively challenging for scheduled commercial banks (SCBs) over the last quarter-century, according to RBI data.
This is borne out by the fact that SCBs’ credit disbursement and deposit accretion activity in rural India lagged that of semi-urban, urban and metropolitan areas.
A perusal of RBI data shows that while SCBs’ loan outstanding in rural India as at March-end 2025 multiplied about 30 times in the last 25 years, it is still behind the overall average increase of about 41 times for all areas (population groups) – rural, semi-urban (SU), urban and metropolitan.
A similar trend prevails on the deposit front. SCBs’ deposits in rural areas increased about 20 times during the said period, lagging the average accretion of about 28 times for all areas.
SCBs’ deposit growth in semi-urban and urban areas, too, is behind the average increase across population groups, with their deposits growing 22 times and 26 times, respectively, in the last 25 years. These Banks fared well in metropolitan centres, with their deposits jumping 36 times.
Rapid urbanisation
This development comes even as majority of India’s population continues to live in the hinterland amid rapid urbanisation.
The proportion of the urban population in the total population has increased from 28 per cent of the total population in 2000 to 37 per cent in 2024, per World Bank data
Correspondingly, the proportion of rural population in total population declined from 72 per cent of total population in 2000 to 63 per cent in 2024.
Overall, the 41 times rise in outstanding credit in the last 25 years outpaces the 28 times increase in outstanding deposits. Simultaneously, the credit-deposit ratio across population groups rose to 80 per cent in 2025 from 56 per cent in 2000.
Banking expert V Viswanathan observed that one thing that is apparent is that deposit growth is less than advances growth across all segments.
“Deposit mobilisation is less than potential in rural and semi-urban segments and to a certain extent in the urban segment.
“The urban and metro segments capture the attention of the bankers in improving their credit and deposit portfolio,” he said.
Further, the advances growth in rural and semi-urban segments is pathetically low compared to growth in urban and metro segments. The emergence of retail probably explains the growth of advances in urban and metro areas.
Published on August 31, 2025
