Reserve Bank of India (RBI) stated today that the preliminary estimate of household financial savings is placed at 8.2% of GDP in Q3:2020-21, exhibiting a sequential moderation for the second consecutive quarter after having spiked in the pandemic-hit first quarter of 2020-21. The moderation was driven by a significant weakening in the flow of household financial assets, which more than offset the moderation in the flow of household financial liabilities.
The ratio of household (bank) deposits to GDP declined to 3% in Q3:2020-21 from 7.7% in the previous quarter. Despite higher borrowings from banks and housing finance companies, the flow in household financial liabilities was marginally lower in Q3: 2020-21 following a marked decline in borrowings from non-banking financial companies. Household debt to GDP ratio, which is based on select financial instruments, has been increasing steadily since end-March 2019. It rose sharply to 37.9% at end-December 2020 from 37.1% at end-September 2020.
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