RBI Report Reveals Big Shift in Savings Habits: Indians Moving Money Out of Savings Accounts and Into FDs

A new report from the Reserve Bank of India (RBI) has highlighted a significant change in the way Indians are managing their savings. For decades, savings accounts have been the preferred destination for household funds due to their safety, liquidity, and convenience. However, recent data suggests that depositors are increasingly moving their money away from savings accounts and into fixed deposits and other term deposit products.

The trend reflects changing investor priorities as people seek better returns amid fluctuating interest rates and evolving economic conditions.

Savings Accounts Losing Their Share

According to RBI’s latest Annual Basic Statistical Return on Deposits report, the share of savings account deposits in the banking system has steadily declined over the past four years.

In March 2022, savings accounts accounted for 34.6% of total bank deposits. By March 2026, that figure had dropped significantly to 28.7%.

At the same time, term deposits—including fixed deposits (FDs)—have gained popularity. Their share in total deposits increased from 55.2% in March 2022 to 61.6% in March 2026.

The data indicates that depositors are increasingly prioritizing higher returns over the flexibility offered by traditional savings accounts.

Why Are People Moving Away from Savings Accounts?

One of the biggest reasons behind this shift is the growing gap between savings account interest rates and fixed deposit returns.

Most banks currently offer relatively low interest rates on savings accounts. For example, the country’s largest public sector lender, SBI, offers around 2.5% interest on savings balances.

In contrast, the same bank offers substantially higher returns on fixed deposits:

• Around 6.25% on one-year FDs.

• Around 6.45% on two-year FDs.

Private sector banks have also maintained a similar interest-rate structure, making fixed deposits considerably more attractive than ordinary savings accounts.

Inflation Is Influencing Decisions

Another important factor driving the trend is inflation.

When the interest earned on a savings account is lower than the inflation rate, the depositor effectively loses purchasing power over time. This situation results in what economists call a "negative real return."

For instance, retail inflation was recorded at 3.48% in April 2026, while many savings accounts continued offering returns below that level.

As a result, depositors are increasingly choosing investment avenues that provide returns capable of keeping pace with inflation.

Key Findings From the RBI Report

The RBI report reveals several noteworthy developments in the banking sector.

Declining Savings Deposit Share

Between March 2022 and March 2026:

• Savings deposits fell from 34.6% to 28.7% of total deposits.

• Term deposits increased from 55.2% to 61.6%.

Households Still Dominate Bank Deposits

Despite changing preferences, ordinary households continue to contribute the majority of banking deposits.

According to the report:

• Household deposits account for 59.3% of total bank deposits.

This highlights the crucial role of retail savers in India's banking system.

Rising Contribution From Businesses

The report also shows growth in deposits from businesses and institutions.

• Non-financial corporate deposits increased from 17.7% to 18.5%.

• Financial corporations' share rose from 6.8% to 7.8%.

These figures indicate stronger participation from institutional depositors alongside retail investors.

Large Deposits Continue to Dominate Fixed Deposits

The RBI data suggests that high-value deposits continue to account for a significant portion of term deposits.

Among all fixed deposits:

• Deposits worth ₹1 crore or more accounted for 46.3%.

• Deposits of ₹5 crore or more represented 34.8%.

• Deposits up to ₹5 lakh accounted for 17.8%.

This shows that large investors and institutions continue to play a major role in the fixed deposit market.

Deposit Tenure Preferences Have Also Changed

The report highlights an interesting shift in depositor behavior regarding investment duration.

Growing Preference for 1–3 Year Deposits

Deposits with maturities ranging from one to three years have become increasingly popular.

Their share rose substantially during the period under review, reflecting investor confidence in medium-term fixed-income products.

Declining Interest in Short-Term Deposits

Meanwhile, deposits with maturities below one year have witnessed a notable decline.

This suggests that savers are willing to lock in funds for longer periods to secure better interest rates.

How Repo Rate Influences Deposit Trends

The RBI’s monetary policy plays a crucial role in determining bank deposit rates.

When the central bank raises the repo rate:

• Banks often increase FD interest rates.

• Depositors earn better returns on fixed deposits.

• Savings products become more attractive.

Conversely, when repo rates decline, deposit rates typically come under pressure.

If inflation remains under control while deposit rates stay elevated, savers enjoy stronger real returns, making fixed deposits even more appealing.

What This Means for Savers

The RBI report clearly indicates that Indian savers are becoming more return-conscious. While savings accounts continue to serve as a convenient option for emergency funds and day-to-day transactions, many depositors are shifting surplus funds toward fixed deposits to earn higher yields.

For investors seeking safety and predictable returns, fixed deposits remain one of the most popular choices in the current interest-rate environment.

Bottom Line

The latest RBI data paints a clear picture of changing financial behavior in India. Savings accounts are gradually losing ground as depositors search for better returns through fixed deposits and other term deposit products. With FD rates significantly higher than savings account rates and inflation continuing to influence investment decisions, the trend is likely to remain strong in the coming months.

For savers, the key takeaway is simple: while liquidity remains important, earning meaningful returns on idle money has become an increasingly important priority.