Aggregate bank deposits of scheduled commercial banks (SCBs) in rural areas of the state decreased to Rs 91,212 crore in fiscal year 2020-21, from Rs 1.06 lakh in 2019-2020 , according to data from the Reserve Bank of India (RBI).
The first quarter of fiscal 2021, when the nationwide lockdown was imposed to curb the spread of Covid-19, saw total bank deposits drop 21% to Rs 84,653 crore from the previous quarter. This indicated cash withdrawals worth Rs 22,346 crore in a single quarter.
“Uncertainty due to foreclosure, anticipated emergencies and Covid has led to a withdrawal of panic in rural areas, leading to a drop in aggregate deposits. Bank branches in rural Gujarat were remote and access due to foreclosure restrictions was an issue. This has led to people withdrawing huge sums of money, ”a source told the State Bankers Committee (SLBC) – Gujarat.
The decline in bank deposits has been reported in 20 districts, including Ahmedabad, Amreli, Banaskantha, Bharuch, Rajkot, Surat, Kheda, Mehsana, Morbi and Patan, among others.
“However, deposits increased from the second quarter with the recovery of the agricultural sector. But the growth rate remained slow. For fear, people kept cash reserves. Another reason for the decline in deposits is also the upgrading of bank branches from rural to semi-urban, ”said Mr. M. Bansal, Manager, SLBC – Gujarat.
According to sources in the banking sector, the exodus of migrants and the fear of a new closure have led to the withdrawal of large sums and a slowdown in the deposit rate.
“Containment was a major factor of uncertainty for the rural population and they need money to buy seeds and fertilizers, being heavily dependent on agriculture. Many have had difficulty accessing money and have therefore withdrew more money. On the other hand, even though the agricultural production was good giving them good returns, a small part of the funds was diverted to bank deposits, “said a source at a public sector bank. .
The outflow of migrants has also been the cause of the drop in deposits and the slowdown in the recovery. “Many migrants have lost their jobs and returned to their countries of origin with no source of income. This eroded savings and increased consumption and, in turn, the cash needs of rural households increased. In addition, the tendency not to part with money in uncertain situations prevailed, causing deposits to decline, ”said Jayshree Vyas, Managing Director of SEWA Bank.
Aggregate bank deposits from expected commercial banks in Gujarat increased 11% from Rs 7.63 lakh crore in 2019-20 to Rs 8.47 lakh crore in 2020-21, RBI data suggests. Excluding rural areas, deposits increased in semi-urban, urban and metropolitan areas.