Why Indians are moving money from savings accounts to FDs, according to an RBI report

Key Insights 
 

1. The proportion of savings account deposits as a percentage of total deposits fell from 34.6% in March 2022 to 28.7% in March 2026, and the proportion of fixed deposits rose from 55.2% to 61.6%.
    
2. The proportion of term deposits in total deposits had increased to 60.3% from 57.2% in March 2023 due to an increase in interest rates.

The Great Savings Switch: What's Driving the Shift from Savings Bank Accounts to Fixed Deposits in India

The trend among Indians to alter their saving pattern is becoming more evident by the day. 

As per the recent RBI report, the proportion of savings accounts in the total bank deposits has fallen from 34.6% in March 2022 to 28.7% in March 2026. 

The proportion of fixed deposits has risen from 55.2% to 61.6%. It is quite simple to make sense of these statistics at the same time. 

If the differential between savings bank account interest rates and FD returns widens enough, customers tend to switch sides.

While the immediate effect of the change does not seem very worrying for the banks. 

However, any prolonged trend of falling low-cost savings accounts is likely to be detrimental to bank profitability. 

For example, the savings account rate offered by State Bank of India, India's biggest public sector bank, is 2.5%, while the interest rate on one-year fixed deposits stands at 6.25%. 

In the case of two-year FDs, the highest return offered by banks is 6.45%.

The table below presents a clear picture of how India's deposit composition has shifted, drawing on RBI data reported through March 2026.

Fixed deposits of Rs 1 crore or more now account for 46.3% of total term deposits, while FDs of Rs 5 crore or more alone account for 34.8%, indicating that even large investors are prioritising fixed deposits.

From Parking Money to Earning More Money: The Implications of This Change for Common Indians

This trend represents an intelligent approach to managing one’s finances for the common person. 

If one has a lot of money parked at home and is earning only 2.5% on a savings account, while inflation exceeds that level, he or she is losing purchasing power every single day. 

The total amount held in term deposits rose by 13.5% year-on-year in June 2025, compared to savings deposits, which showed a growth of 5.4%. 

Middle-class people and senior citizens are discovering that FDs are easy and safe ways of making returns.

A positive thing about FDs is that they are covered by the DICGC up to the tune of Rs 5 lakh per depositor for each bank. 

The FD rates offered by Small Finance Banks currently range from 6.25% to 8.10%, giving people better choices than ever before.

Analysts See a Rational Change, But Advise Banks to Adapt Fast

The rational change in consumers’ behaviour is viewed as a result of increased financial consciousness instead of panic. 

According to Sarvjeet Singh Virk, the CEO of jUMPP, the drop in savings bank accounts means that people are more concerned about their finances and prefer a more disciplined approach to saving money. 

In turn, such a development follows global trends that emerged when central banks started increasing rates rapidly since 2022.