A recent SBI Research report has unveiled a stark contrast in investment preferences between senior citizens and younger investors, prompting Finance Minister Nirmala Sitharaman to urge public sector banks to intensify deposit mobilisation efforts.
Nearly 47% of fixed deposits (FDs) are now held by senior citizens, who continue to favour these safe investments despite their declining post-tax returns. Meanwhile, younger investors are gravitating towards riskier assets such as mutual funds and equities, drawn by the promise of higher returns.
The report highlights that the median age of capital market investors has dropped to 32 years, with 40% of them under 30. The number of mutual fund investor accounts has surged nearly fivefold, growing from less than 4 crore in March 2014 to over 19 crore by June 2024.
SBI economists have recommended revisiting the tax treatment on bank deposits to make them more appealing.
They suggest taxing deposits at the time of withdrawal rather than as they accumulate, as the current system is believed to have stifled deposit growth by around 7%.
In light of these shifting trends, Sitharaman has called on public sector banks to boost deposit mobilisation efforts to keep pace with loan growth.
She urged banks to launch special campaigns, particularly focusing on rural and semi-urban areas.
Additionally, the finance minister emphasised the need for banks to strengthen customer relationships and enhance cybersecurity measures to protect against rising threats.