HYDERABAD: For the first time in decades, the Reserve Bank of India (RBI) and the Central Statistics Office held back data on where Indian households are parking their financial savings.
The move comes at a time when overall household savings has been steadily declining. Between FY12 and FY19, they fell 6.4 per cent.
Every year on September 15, the Central bank publishes its annual Handbook of Statistics on the Indian economy, which discloses the changes in financial assets and liabilities of households such as bank deposits, Life Insurance Corporation, Provident Fund, shares and debentures.
However, the Central bank’s latest data released on Sunday drew a blank for both FY18 and FY19.
Curiously, though RBI published provisional estimates of household financial savings last September, the latest data handout excluded FY18 figures for undisclosed reasons. When contacted, RBI declined to respond, while CSO couldn’t be immediately reached for comment.
According to sources, the delay was from the CSO, which typically shares provisional estimates of household financial savings with RBI, and publishes revised estimates with a lag of one year. It’s unclear why the CSO withheld the data.
Traditionally, households have been the largest contributors to total financial savings followed by large corporates and government bodies. Higher savings imply ample liquidity for banks and lower interest rates.
Alarmingly, households’ bank deposits plunged to 25 per cent of overall financial savings in FY18 from 67 per cent in FY17. The startling downfall of bank deposits is a first in four decades (since the data available), but officials reasoned that the decline was partly due to a change in definition with unincorporated entities, which were part of the household sector, were now being counted as corporate savers.
During FY18, bank deposits reduced by half from Rs 9.4 lakh crore in FY17 to Rs 4.7 lakh crore in FY18. In the past four decades, there have been only two occasions when bank deposits stood close to a quarter of all financial savings — in FY90 and FY92 when they fell to 29 and 26 per cent respectively.
The last time bank deposits stood below Rs 5 lakh crore was in FY10 at Rs 3.9 lakh crore. The downward shift of deposits was also marked by an unusual increase in currency savings, comprising 25 per cent of total household financial savings, defeating efforts of moving towards a cashless economy.