This reflects the transmission of policy rates on liabilities as the banking regulator lowered repo rate and cash reserve ratio by 100 basis points each, which prompted banks to lower interest rates on deposits.
Loans linked to external benchmark rates also fell immediately after RBI cut rates, reflecting transmission of policy rate. Nearly 63% of loans are linked to external benchmarks such as repo rate.
Interest rates on term deposits above 7% significantly dropped to 54% by September, down from 73% in March, as banks lowered rates following RBI’s policy cuts. Loans linked to external benchmarks also saw immediate rate reductions. Public sector banks’ deposit share increased, while Maharashtra led in deposit mobilization.
The RBI data showed that 64% of deposits were contracted at a rate below 7% and 5% were contracted at a rate above 8% as of September. Share of term deposits of ₹1 crore and above grew 12.3% on a year-on-year basis in September 2025 and their share stood at 45.6% comparedwith 45.3% a year ago.
The data showed that 69.8% of term deposits were held under the original maturity bucket of ‘one to three years’ against 66.8% a year ago and 20% of term deposits were held under maturity period up to one year.
Public sector banks‘ share of deposits rose to 57.6% in September from 57.3% a quarter ago partly because deposit growth declined for private banks.
PSU banks saw 9.6% growth in deposits on a year-on-year basis while for private banks, deposits grew 10% in September compared with 15.1% a year ago.
Among states, Maharashtra accounted for the highest share of deposits mobilised at 16.5%. Maharashtra, Uttar Pradesh, Karnataka, NCR of Delhi, Tamil Nadu and West Bengal jointly accounted for 54.2% of household deposits in September.
The data also showed that the share of savings accounts remained steady at 28.4% since March, while the share of current accounts fell from 10.1% in March to 9.3% as of September 30. The share of term deposits rose to 62.3% from 61.4% a year ago.
