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As Finance Minister Nirmala Sitharaman holds a review meeting with heads of Public Sector Banks and Regional Rural Banks on Monday, the State Bank of India (SBI) in its latest report noted that the belief that the deposit growth in the banking sector is flagging is just a statistical myth. However, the report highlighted that, while it's true that <keyword id="19998083" type="General" weightage="20" keywordseo="credit-growth" source="keywords">credit growth</keyword> has outpaced deposit growth in recent years, leading some to trumpet this as a sign of decelerating deposit activity, a deeper analysis reveals a different story. The report highlighted that in FY23, the banking sector, particularly All Scheduled Commercial Banks (ASCBs), registered the highest absolute growth in both deposits and credit since 1951-52. Deposits grew by an impressive Rs 15.7 lakh crore, while credit expanded by Rs 17.8 lakh crore, pushing the incremental Credit-Deposit (CD) Ratio to a staggering 113 per cent. The momentum continued into FY24, with deposits rising by Rs 24.3 lakh crore and credit by Rs 27.5 lakh crore. Despite the narrative suggesting a slowdown in deposit growth, the data tells us otherwise. Since FY22, incremental deposit growth has actually outpaced incremental credit growth, with deposits increasing by Rs 61 trillion compared to Rs 59 trillion in credit. "Decadal Deposits have expanded by a sharp 2.75 times, but Decadal credit expanded by 2.8 times since FY22, deposits expanded Rs 61 trillion vis-a-vis credit expansion at Rs 59 trillion," said the report. The report noted that the key issue at play here is not the quantum of deposits but the pricing. Historical trends have shown periods where credit and deposit growth diverge for 2 to 4 years. "The myth of a flagging deposit growth appears as just a statistical myth with credit growth outpacing deposit growth being tom-tommed as a deceleration in deposit growth" said the report. According to a Reserve Bank of India (RBI) study, as of June 2024, we are in the 26th month of this divergence, with predictions indicating that the cycle could end between June and October 2025. "The end of the divergence cycle could be June 2025 -October 2025" the report noted. The report also added that once this divergence ends, deposit growth is expected to pick up, while credit growth could slow significantly, signaling the beginning of a rate reversal cycle and a potential economic slowdown. Another noteworthy trend in the banking system is the decline in CASA (Current Account Savings Account) deposits. The report stated that the CASA deposits fell to 41.0 per cent in FY24 from 43.5 per cent in FY23, largely due to a decline in SB (Savings Bank) deposits. This decline, while somewhat aligned with pre-pandemic levels of 42 per cent, reflects a shift in how SB deposits are being used. Increasingly, SB deposits are being used primarily for transactional purposes, particularly UPI transactions, leading to greater movement across the banking system and raising concerns about the stability of SB deposits. Moreover, the rising returns on term deposits have been driving a significant compositional shift in bank deposits. The share of term deposits in total deposits has increased to 59.0 per cent in FY24 from 56.5 per cent in FY23, while the share of CASA deposits has continued to decline. The report said that this shift is a natural response to the increasing interest rate environment, as funds move from low-interest CASA accounts to higher-yielding time deposits. On an incremental basis, term deposits accounted for nearly 78 per cent of the total deposits in FY24, underscoring the impact of higher <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> on deposit behavior. In conclusion, while the myth of declining deposit growth may persist, the reality is more nuanced. Deposit growth remains strong, with term deposits taking a larger share of the pie as interest rates rise. SEE ALSO: <a href="https://www.businessinsider.in/tech/mobile/news/google-pixel-9-pro-fold-launched-in-india-at-172999-but-you-cant-get-your-hands-on-it-right-now/articleshow/112517193.cms">Google Pixel 9 Pro Fold launched in India at ₹1,72,999, but you can’t get your hands on it right now</a> <a href="https://www.businessinsider.in/stock-market/news/ipo-scam-two-victims-from-hyderabad-lose-over-11crore-in-fake-ipo-scams/articleshow/112488051.cms">IPO scam – Two victims from Hyderabad lose over ₹11 crore in fake IPO scams</a> <a href="https://www.businessinsider.in/tech/news/indias-wearables-market-decline-for-the-first-time-as-smartwatch-shipments-fall/articleshow/112397246.cms">India’s wearables market decline for the first time as smartwatch shipments fall</a>

SBI report dismisses bank deposit concerns as a 'Statistical Myth'

<ul><li>Apart from a slight dip as the nationwide lockdown started, UPI’s numbers had been growing constantly until January 2021.</li><li>While there’s no beating <keyword id="6357886" type="UNKNOWN" weightage="20" keywordseo="phonepe">PhonePe</keyword>’s phenomenal growth in the space, what’s noticeable is <keyword id="6357120" type="DEFINITION" weightage="20" keywordseo="paytm">Paytm</keyword>’s rise in the segment.</li><li>Paytm’s growth in UPI comes as the payments method sees widespread adoption from merchants.</li></ul>With the COVID-19 pandemic, the move to digital has become even more important and with that, the growth of India’s financial technology players. Over the past one year, UPI or United Payments Interface, India’s burgeoning digital payments bet, has seen exponential growth and taking home the biggest shares in the market are players like PhonePe, Paytm and <keyword id="2750705" type="PERSON" weightage="20" keywordseo="Google-Pay">Google Pay</keyword>. Apart from a slight dip as the nationwide lockdown started, UPI’s numbers had been growing constantly until January 2021. <div type="image" title="UPI 2020 final" msid="81527645" hostid="261"></div> But what’s interesting is how the top three players are vying for a bigger share of the market. <div type="image" title="upi apps 1" msid="81527655" hostid="261"></div> While there’s no beating PhonePe’s phenomenal growth in the space, what’s noticeable is Paytm’s rise in the segment, even while Google Pay, which was once the leader in UPI has been seeing its numbers decreasing for the past four months. <cmsannotation type="cmsannotation" annotationid="Merchants – the next big driver" comment="subhead" text="Merchants – the next big driver">Merchants – the next big driver</cmsannotation> Paytm’s growth in UPI comes as the payments method sees widespread adoption from merchants. And that’s also where the current market leader PhonePe has been winning the game. “Paytm has traditionally been much stronger in the P2M (peer to merchants) segment than the P2P (peer to peer) segment, as the usage of UPI starts to become more and more for commerce, that is where Paytm has gained. Google Pay has been a more consumer app, while PhonePe has been both. Ultimately, how much P2P payment will happen, what drives payments is commerce,” Shishir Mankad, head of financial services, Praxis Global Alliance told Business Insider. Narendra Yadav, Vice President, Paytm told Business Insider that P2M transactions are 70% of Paytm’s overall transactions, whereas for UPI overall that share is around 40%. But Yadav also said that the company’s dominance in merchants is not yet completely visible in UPI. “Our focus has been on merchants – online or offline. Whenever merchant transactions are increasing, Paytm will benefit. And after COVID-19, merchants have been moving to digital transactions where Paytm is also seeing huge growth,” he said. Business Insider has sent queries to Google Pay and PhonePe. We will update the copy if and when there is a response. <cmsannotation type="cmsannotation" annotationid="Success rate of UPI transactions" comment="subhead" text="Success rate of UPI transactions">Success rate of UPI transactions</cmsannotation> Paytm said that as per a NPCI report it registers the lowest technical decline rate of 0.01% as compared to all UPI remitter banks and 0.04% as compared to all UPI beneficiary banks. “Paytm’s success rate in UPI is much better, and there’s no one who comes closer to that,” said Yadav. However, Gupta believes that when compared to the likes of Google Pay the reasons are beyond the company. “The reason lies with banks and not Google Pay. Paytm has an advantage because it's a payments bank, so it controls the entire stack which basically means a lower failure rate. Having said that Google Pay works with three or four major banks and failure rates aren’t just dependent on banks but also NPCI’s UPI stack,” Arnav Gupta, analyst at Forrester told Business Insider. <cmsannotation type="cmsannotation" annotationid="Adopting new users in UPI" comment="subhead" text="Adopting new users in UPI">Adopting new users in UPI</cmsannotation> The acceleration in UPI also means new users and new payers being added to the ecosystem. And players have also been spending on marketing to get these users. Both Paytm and PhonePe have gone on to sponsor Indian Premier League, the glam cricketing tournament. “These numbers are dependent on the kind of marketing and ad spending these companies keep doing. Transactional volumes are always increasing, and with that the average transaction ticket size is also increasing. Digital adoption by the consumers is on the higher side especially due to the COVID-19 pandemic, a lot of new users and new payers were added to the ecosystem,” said Gupta. The Vijay Shekhar Sharma-led company had recently said that it processes 1.2 billion transactions in a month. In January 2021, Walmart-owned PhonePe had said it processes over a billion monthly transactions. “PhonePe now has more than 275 million lifetime registered users, which essentially means that one in every five Indians now has PhonePe. Our monthly transaction count is up nearly 100% year-over-year. Our monthly active users (MAU) has crossed 110 million monthly users with a very healthy 97% monthly customer repeat rate. Even in terms of monetary value, our annualised total payment volume (TPV) run rate has crossed the $300 billion mark,” PhonePe’s chief executive Sameer Nigam had said during Walmart’s fourth quarter earnings. Meanwhile, Paytm knows it has a long way to go in the UPI ecosystem. The $16 billion startup has also announced, on Monday, that its UPI handles have been approved by India stock regulator Securities and Exchange Board of India for users to pay for IPOs. And this is just one of the tricks that Paytm is using to leverage its other businesses. “Paytm has many businesses, and if they put their might behind this it will surely yield results. While in UPI, Paytm is a distant third, if you look at Paytm wallet to wallet transactions that’s very large but doesn’t get recorded as it doesn’t enter any settlement,” said Mankad. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/banks-are-not-liable-to-cough-up-payments-if-you-have-been-a-victim-of-fraud-or-scams/articleshow/81526097.cms">Banks are not liable to cough up payments if you have been a victim of fraud or scams</a> <a href="https://www.businessinsider.in/business/startups/news/cred-which-rewards-you-for-paying-your-credit-card-bills-is-reportedly-indias-latest-unicorn/articleshow/81523219.cms">CRED, which rewards you for paying your credit card bills, is reportedly India’s latest unicorn as its valuation more than doubles in two months</a>

Paytm is betting big on UPI and though it’s still a distant third, analysts believe it could have an edge over PhonePe and Google Pay

<ul class="summary-list"><li>Conservative <a href="https://apnews.com/article/business-elections-voting-campaigns-seoul-f29dd8982b18c1f7318d579b9afc83f1">Yoon Suk-yeol of the People Power Party</a> won <keyword id="11944254" type="UNKNOWN" weightage="60" keywordseo="south-korea" source="Orion">South Korea</keyword>'s <keyword id="12168485" type="UNKNOWN" weightage="60" keywordseo="presidential-election" source="Orion">presidential election</keyword> on Wednesday.</li><li>He had previously criticized a 52-hour workweek policy and said workers should be able to work 120 hours.</li></ul>South Korea has been trying to put an end to chronic overwork — but the country's incoming president has in the past appeared to push for even longer work hours.Conservative <a href="https://apnews.com/article/business-elections-voting-campaigns-seoul-f29dd8982b18c1f7318d579b9afc83f1">Yoon Suk-yeol of the People Power Party</a> won South Korea's presidential election on Wednesday. In July, Yoon criticized outgoing <a href="https://www.businessinsider.com/south-korea-has-dropped-its-inhumane-workweek-to-52-hours-a-week-2018-7">President Moon Jae-in's policy</a> to promote better work-life balance. Moon's policy limits the hours people can work to 52 hours a week — that's 40 hours a week, plus another 12 hours of overtime. Yoon said the system should allow for more flexibility, as some workers — such as game developers — may need to work longer hours during peak periods before going on an extended break."Workers should be allowed to work 120 hours a week and then take a good rest," he said, according to the <a href="https://www.koreatimes.co.kr/www/nation/2021/11/356_313675.html">Korea Times.</a> His suggestion of 120 hours a week is the equivalent of five 24-hour days.The average South Korean worker worked 1,908 hours in 2020 (36.69 hours a week), according to data from the <a href="https://data.oecd.org/emp/hours-worked.htm">Organization for Economic Co-operation and Development (OECD.)</a> That's one of highest hours-worked totals across the 38-country economic organization, behind only Costa Rica, Mexico, and Colombia. In the US, for comparison, the average worker put in 1,767 hours of work in 2020 (33.98 hours a week).Although South Korea's working hours in 2020 looked punishing, they were down from 1,967 hours in 2019 and 2,106 hours in 2013, per <a href="https://www.oecd-ilibrary.org/employment/data/hours-worked/average-annual-hours-actually-worked_data-00303-en">OECD data</a>.South Korea is known for its hard-driving work culture. Workplace traditions such as long hours and weekend work are rife — even at <a href="https://www.insider.com/south-korea-startups-still-caught-in-abusive-gapjil-workplace-cultures-2021-7">startups</a>. There have also been reports of <a href="https://www.insider.com/south-korean-parcel-deliveryman-dies-from-overwork">delivery workers</a> who have died from overwork.Insider was not immediately able to reach Yoon or his representative for comment.<h2>A series of controversial statements</h2>Yoon's comments on the length of the workweek didn't sit well with many."If a person works 120 hours a week, he will die," said a <a href="http://www.koreaherald.com/view.php?ud=20210721000824">spokesperson</a> of Yoon's presidential rival, Lee Jae-myung from the Democratic Party, the <a href="http://www.koreaherald.com/view.php?ud=20210721000824">Korea Herald</a> reported in July.Yoon later said his comments were misinterpreted."What kind of a dictator would make people work 120 hours a week? That's nonsense," he said, per the Korea Herald. "I heard that people on the political opposite side from me distorted what I said as if I said we should work 120 hours. It's not worth any attention."Yoon has made other controversial comments on his campaign trail, including one in which he appeared to disparage Africa."Companies depend on internationally competitive technology. There is no such thing as hands and feet <keyword id="11910050" type="UNKNOWN" weightage="60" keywordseo="labor" source="Orion">labor</keyword> like people used to do anymore. India doesn't even do that anymore. It's something only a place like Africa still does," said <a href="https://markets.businessinsider.com/news/stocks/yoon-seok-youl-faces-racism-controversy-with-comment-belittling-africa-10544723">Yoon during a meeting</a> with university students in September, the <a href="https://www.koreatimes.co.kr/www/nation/2021/09/356_315689.html">Korea Times</a> reported.He has also suggested that feminism is responsible for the country's abysmal birth rate. South Korea has one of the lowest fertility rates in the world at 0.81 births per woman in 2021, according to the <a href="http://www.koreaherald.com/view.php?ud=20220309000107">Korea Herald,</a> citing official data. The <a href="https://www.brookings.edu/blog/up-front/2021/05/24/will-births-in-the-us-rebound-probably-not/">US total fertility rate</a> was 1.64 in 2020, according to the <a href="https://www.cdc.gov/nchs/data/vsrr/vsrr012-508.pdf">National Center for Health Statistics.</a>"Some say feminism is too politically exploited [to the point] it prevents healthy relationships between men and women," Yoon said, according to the <a href="https://www.upi.com/Top_News/World-News/2021/08/02/skorea-South-Korean-Yoon-Seokyoul-feminism-comments/6541627927142/">UPI.</a> "From a social standpoint, the conditions are ill-suited for having and raising children. This is not a problem that can be solved by giving out government subsidies."

South Korea's incoming president once criticized the country's 52-hour workweek and said people should be allowed to work 120 hours a week

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SBI report dismisses bank deposit concerns as a 'Statistical Myth'

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Paytm is betting big on UPI and though it’s still a distant third, analysts believe it could have an edge over PhonePe and Google Pay

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South Korea's incoming president once criticized the country's 52-hour workweek and said people should be allowed to work 120 hours a week

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