Indian households are considering shifting savings back to bank deposits as weak stock markets and geopolitical worries sap demand for riskier assets, the chief executive officer at Sumitomo Mitsui Banking Corp.-backed Yes Bank Ltd. said.
“Anecdotally, both at the bank and across the industry, we see some savings returning to deposits,” Vinay Tonse, the head of India’s sixth-largest private sector lender, said in an interview. “We are receiving a lot of inquiries about whether this is a good time to shift from equities to fixed deposits.”
A gradual return to fixed deposits could provide relief to lenders that have struggled to keep pace with credit demand amid intense competition. Bank credit in India grew 16.2% in the year through May 15, the fastest pace since June 2024, according to data from the central bank, while deposits increased 12.2% over the same period.
Indian stocks surged from pandemic-era lows to a record in September 2024, making the NSE Nifty 50 Index the world’s best-performing major market. Since then, lofty valuations and the artificial intelligence-boom elsewhere have drawn foreign investors away, while higher oil prices linked to the Iran war have added pressure. Indian equity mutual fund inflows posted their biggest drop in three years in May.
SMBC, part of Japan’s second-largest banking group, became the top shareholder of Yes Bank with a 24.9% stake last year. At that time, the deal marked the biggest foreign investment in India’s growing banking sector, which has attracted a slew of Japanese and other firms.
Tonse, a banker with more than three and a half decades of experience, said Yes Bank had signed agreements with SMBC to cross refer clients for retail offerings and deposits, seeking to capitalize on the lender’s relationship with large corporates. Tonse previously led State Bank of India’s retail operations, overseeing around $800 billion, the largest such franchise in the country.
Yes Bank’s shares have risen 3% so far this year, while the broader banking index has dropped about 7%.
