Ahmedabad: For years, Gujaratis have been known for their prudent saving habits, but the tide seems to be turning. With stock markets rallying, gold glittering and silver shining, bank deposits are no longer the go-to investment choice. The once double-digit growth in bank savings has now slowed to single digit, reflecting a shift in investor preference.
Bank deposits in Gujarat stood at Rs 12.68 lakh crore in the third quarter of FY 2025, marking a growth of just 7.3% from Rs 11.82 lakh crore in the same period last year, according to the latest report by the State Level Bankers’ Committee (SLBC), Gujarat.
This slowdown comes after a prolonged period of strong deposit growth. According to bankers and financial advisors, investors are looking beyond banks, lured by asset classes that delivered significantly higher returns.
Till Dec, the Indian equity markets were on a bull run, drawing several retail investors towards stocks and mutual funds. Meanwhile, gold and silver prices surged, making them an attractive bet. Against the modest 6.8% interest rate on bank deposits, mutual funds, stocks and precious metals offered returns ranging from 22% to 51%. With such lucrative options, bank savings lost their appeal.
“The stock market’s performance, coupled with rising gold and silver prices, has given investors multiple reasons to shift funds away from fixed deposits. Over the years, people began reducing their surplus funds in savings bank accounts. Instead, they park the surplus money in liquid funds with an easy liquidity option, and hence its popularity is increasing. Traditional savings instruments seem unattractive in comparison. In fact, a number of women are also turning to invest in MFs through the SIP route rather than opening recurring deposits or fixed deposits,” said Jaydevsinh Chudasama, an investment advisor. Due to international factors, gold prices have also remained highly volatile and on an upward trajectory, as a result of which, higher returns on gold attracted investors. Moreover, the yellow metal has always been a favourite among Gujaratis and saw higher safe-haven demand.
“Silver, too, saw a significant rally, adding to the allure of commodities. With multiple avenues yielding better returns, the risk appetite has grown, and fixed deposits have taken a back seat,” explained another financial advisor, requesting anonymity. However, banking experts believe this may be a temporary phase. “Equities are cyclical, and commodity prices fluctuate. Once the market stabilises, bank deposits could regain traction,” said a banker.