Bank Deposit Concentration in Metros Explained for Investors


A handful of large metro areas account for a dominant share of bank deposits, skewing the geographic distribution. Private banks show greater concentration than public sector peers.

Analysis for a Layman:

RBI data shows over 60% of bank deposits are from just 6 major metro areas like Mumbai and Delhi. These cities have higher incomes and penetration of private banks chasing affluent clients. Term deposits above ₹1 crore make up 44% of the total. So bulk deposits come from pockets of high activity. Private banks get 55% of deposits from the top 30 urban centers. Their tech focus attracts younger clients.

Bank Deposit Concentration in Metros

Original Analysis:

Deposit concentration in metros is logical with economic activity and incomes skewed to big cities. Private banks tailor offerings to affluent clients for an edge. This trend will persist as emerging cities take time to mature. Incumbents should expand digitally to tap into smaller regions instead of opening more branches. Fintechs also target metro millennials. Rising rates may attract more rural/senior savers to big banks.

Impact on Retail Investors:

For retail investors, private bank stocks like HDFC Bank, ICICI Bank, Kotak Bank are best placed to capitalize on metro skew. Their deposit franchises will remain sticky despite volatility and reopening. Investors should avoid extrapolating overall industry growth rates to these specific names performing above-average. Stay selective.

Impact on Industries:

Payment banks and neo-banks also disproportionately target metro youth. Their equity stories remain compelling despite liquidity squeeze. However, small finance banks have room to grow deposits by tapping underbanked regions using technology and local agents. Avoid extrapolating metro deposit concentration trends to them.

Long Term Benefits & Negatives:

Over the long term, emerging cities can narrow the deposit divide as incomes converge. But metros will still dominate and attract the most innovative banking models. Record public capex and corporate investment plans will also disproportionately benefit major hubs. However, this leaves rural/semi-urban areas underserved relative to potential.

Short Term Benefits & Negatives:

In the near term, major private banks and fintechs efficiently mining metro deposits have funding benefits and expansion options. But PSUs and smaller private names risk missing the momentum as marginal clients gravitate to sophisticated players. Record low deposit growth may force renewed focus on underpenetrated regions, however.

Companies that will gain:

  • HDFC Bank
  • ICICI Bank
  • Axis Bank
  • Kotak Mahindra Bank

Companies that will lose:

  • Mid-sized banks
  • Small finance banks
  • Microfinance lenders
  • PSU banks

Additional Insights:

RBI may have to tweak priority sector rules to incentivize lending in ignored geographies rather than overheating metro consumption. Market forces alone lead to concentration in high-visibility patches.


India’s bank deposit base will remain concentrated in mega-cities even as banks expand inclusion efforts. Investors should separate metro-focused private banks from more broad-based state-run lenders while assessing growth and asset quality trends.


Nayak, Gayatri. “A Handful of Big Metros Corner Biggest Share of Bank Deposits.” The Economic Times, 8 Dec.

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