Spike in bank deposits in Jan-May due to borrowings, not savings: Report

Cash in circulation has risen strongly by around Rs 3.5 trillion during the first five months of 2020, the highest in the past two decades

The sudden spike in bank deposits in the past few months is on account of a rise in overall borrowings of both central and state governments and not due to an increase in savings, according to a report.

To safeguard their money, depositors are also selecting banks that can provide safety to their money, India Ratings and Research said in the report.

During January-May 2020, aggregate deposits in the banking system grew Rs 7.05 trillion as compared with Rs 4.65 trillion in the corresponding period last year.

Bank credit, however, grew by only Rs 2.2 trillion during January-May 2020, against