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Indians Not Saving As Much In Banks Anymore, Where Is The Money Going?

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It seems that Indian households are no longer saving as much or at least not putting their savings bank account to use when it comes to their money as per a Reserve Bank of India (RBI) bulletin, released in September of 2023.

Some reports claimed that the reason for the decrease in Indian households’ net financial savings was due to an increase in debt and could have an impact on the funds for the government’s capital investments.

Why Are Indians Not Saving In Banks More?

As per the bulletin, the country’s net household financial savings saw a decline to 5.1% of the Gross Domestic Product (GDP) in the financial year (FY)23. The savings that include everything such as bank savings, cash, and equity investments and then deducting debt servicing and consumption saw a fall from the 11.5% that was recorded in FY21 and 7.6% in FY20 (pre-pandemic).

However, a SBI Research report did clarify though that some reports claiming this was a 50-year-year low were misleading “as household savings must be looked into as a sum total of physical and financial savings.”

According to the bulletin, one reason why there were low financial savings in FY23 is because of the rise in financial liabilities. It said, “Financial liabilities jumped Rs 8.2 trillion since pandemic, outpacing the increase in gross financial savings at Rs 6.7 trillion, thus explaining the fall in household net financial saving by Rs 1.5 trillion / 2.5% of GDP.”

It further added how there was also an increase in the asset side of households with insurance and provident and pension funds seeing a rise of Rs. 4.1 trillion.


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The report also claimed that another reason for the low finance savings and higher liabilities was because of the loans that households were taking from commercial banks to increase their physical assets like education, housing or property and vehicles.

Furthermore, the report also saw that households were apparently taking advantage of a low interest rate which “resulted in a paradigm shift of household financial savings to household physical savings in the last 2 years.”

Reports also stated that this increase in especially property assets by households could be due to the real estate sector doing relatively well and property prices also seeing an increase.

The report also pointed out the relation between housing loans and household savings in physical assets writing “Every Re 1 increase in Housing loans has resulted into Rs 2.12 increase in household’s savings in physical assets for the 14 year period ended FY22.”

So essentially the decline in the net financial savings of households is directly proportional to an increase in the household savings in gross physical assets.


Image Credits: Google Images

Feature image designed by Saudamini Seth

Sources: Business Standard, India Today, The Economic Times

Find the blogger: @chirali_08

This post is tagged under: Banks, Banks savings, indian Banks, indian economy, indian economy banks, savings, household savings, savings india, household savings india, Reserve Bank of India (RBI) bulletin, RBI, Reserve Bank of India, bank accounts, financial savings, Gross Domestic Product, Gross Domestic Product 2023, GDP 2023

Disclaimer: We do not hold any right, copyright over any of the images used, these have been taken from Google. In case of credits or removal, the owner may kindly mail us.


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Chirali Sharma
Chirali Sharma
Weird. Bookworm. Coffee lover. Fandom expert. Queen of procrastination and as all things go, I'll probably be late to my own funeral. Also, if you're looking for sugar-coated words of happiness and joy in here or my attitude, then stop right there. Raw, direct and brash I am.

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