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Term deposits below 7% rise as banks reprice liabilities

Created at 1 Jun · 12:21 AM1 source↑ Market-relevant
IN SHORT

The share of bank term deposits below 7% increased to 61.8% in FY26, driven by 125 basis points of policy rate cuts. Depositors favored longer maturities, with one-to-three-year tenures rising to 69.8%. This indicates a structural shift from savings accounts to term deposits.

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Key Numbers

61.8%share of term deposits below 7% in FY26
125 basis pointspolicy rate cuts
69.8%one-to-three-year tenures
61.6%term deposits as % of overall deposits

Who's Involved

Banks
repricing liabilities and observing shifts in deposit structures
Depositors
shifting funds to longer maturities in response to rate cuts

↳ Why This Matters

This development reflects a significant shift in how individuals and businesses are managing their cash in response to changing interest rate environments. As central banks cut policy rates, banks adjust their liability costs, leading depositors to seek better yields by locking funds into longer-term deposits. This trend can impact bank funding costs and overall financial system liquidity.

Key facts

  • Share of term deposits below 7% rose to 61.8% in FY26.
  • This shift is attributed to 125 basis points of policy rate cuts.
  • Depositors moved to longer maturities, with one-to-three-year tenures increasing to 69.8%.
  • Term deposits now constitute 61.6% of total deposits, a structural change from savings accounts.

This development reflects a significant shift in how individuals and businesses are managing their cash in response to changing interest rate environments. As central banks cut policy rates, banks adjust their liability costs, leading depositors to seek better yields by locking funds into longer-term deposits. This trend can impact bank funding costs and overall financial system liquidity.

Frequently asked questions

It indicates that a majority of term deposits are now earning less than 7%, reflecting lower prevailing interest rates.

Depositors are likely seeking to lock in current rates or anticipate further rate declines, opting for longer tenures to secure yields.

It suggests a more permanent change in customer behavior, where term deposits are becoming the preferred vehicle over traditional savings accounts for a larger portion of funds.

What Happens Next

01Monitor further shifts in deposit maturities as interest rate policies evolve.
02Observe the impact on bank net interest margins and funding strategies.

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How It Developed

1 Jun · 12:09 AM
The share of term deposits below 7% rose to 61.8% in FY26, driven by 125 basis points of policy rate cuts.
Economic Times via PiQSuite

Sources

T1
Share of term deposits below 7% jumps as banks reprice liabilitiesm.piqsuite.com

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