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Composition of Domestic Savings
 

  • India, domestic savings comprises of savings from household, private corporate and public sector.
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  • Household sector dominates with around 70% contribution to total gross savings. It consists of physical and financial savings.
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  • Private corporate sector contributes to around 20% followed by public sector of around 4% to total gross savings.
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  • Chart below shows broad break up of components comprising India’s domestic savings (data is for FY13)

 

 

  • Chart below shows sector wise contribution as a percentage to total gross domestic savings over the years.

 

 

Source: RBI

 

  • From the chart above, we can see that household sector has predominately been the largest contributor to domestic savings.
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  • Over the years, contribution of private corporate sector has increased from 11% in 1990 to 23% in 2013.
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  • Public sector contribution has been the lowest and in years from 1999 to 2003 has been negative.
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  • Negative contribution means government has consumed more than its income.
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  • In 2010, public sector contributed nothing to domestic savings.
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Trend in Gross Domestic Savings
 

 

Source: RBI

 

  • Chart above shows trend in India gross domestic savings-total and sector wise as % of GDP.
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  • We can observe, from 1990 till 2000 gross domestic savings as % of GDP has been in the range of 20 to 25%.
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  • Gross domestic savings has been increasing from 2000with highest savings rate of 36.8% in 2008.
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  • However, post 2008, domestic savings rate has been declining and FY2013 was 30.1% of GDP.
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  • The key reason for decline in savings rate is high inflation and negative or low real returns.
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  • On account of increasing consumption expenditure, domestic savings have reduced.

 

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What is net demand and time liability (NDTL)?

 

  • NDTL is sum of demand and time liabilities (deposits) of banks with public and other banks wherein assets with other banks is subtracted to get net liability of other banks.
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  • Deposits of banks are its liability and consist of demand and time deposits of public and other banks.
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  • Demand and time deposits from public form the largest part of bank deposits.
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  • Demand deposits include all liabilities which are payable on demand and includes current deposits, demand liabilities portion of savings bank deposits, demand drafts, balances in overdue fixed deposits etc.
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  • Time deposits are those which are payable otherwise on demand and includes fixed deposits, staff security deposits, time liabilities portion of savings bank deposits etc.
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  • Banks also invest in demand and time deposits of other banks and certificate of deposits. Banks also borrow from other banks in call market etc. This represents banks liability to other banks.
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  • NDTL is calculated and reported every fortnight Friday by banks.
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  • NDTL is used by banks for computation of CRR, SLR and now LAF.
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  • Chart below shows trend of demand and time deposit from public for all scheduled banks from 2001 till June 2013.

 

Tren of Demand and Time Deposit from Public

 
Source: RBI

 

  • From above chart, we can observe that time deposit forms largest part of deposits from public as compared to demand deposits.
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  • Time deposit contributes to around 90% and demand deposit contributes around 10% of aggregate deposits for all scheduled banks.
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  • Chart below shows fortnightly trend in NDTL of all scheduled banks from 2005 to June 2013.

 
Source: RBI

 

 

  • CAGR for all scheduled banks NDTL from March 2000 to 2013 is around 17%.
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  • NDTL for all scheduled banks as on 28thJune 2013 was around 79339bn.

 

Bank and Area wise contribution to Deposits
 

 

 

  • From above two charts, we can see nationalized banks have maximum contribution to deposits of 52% while area wise metropolitan cities dominate with 55%.

 

How the deposits are used

 

 

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