In the last 25 years, the agricultural sectors of India have experienced slower growth in savings and credit compared to other demographic groups.

Published on August 31, 2025

India's rapid urbanisation has been a significant factor in shaping the country's banking landscape. According to World Bank data, the proportion of the urban population in India has increased from 28% to 37% in the last 14 years. This urban growth has led to a surge in banking activities, particularly in metropolitan areas.

Scheduled Commercial Banks (SCBs) have fared well in metropolitan centres, with their deposits jumping 36 times in the last 25 years. The urban and metro segments, receiving more attention from bankers, have seen a substantial improvement in their credit and deposit portfolio.

However, the story is different in rural and semi-urban areas. The proportion of the rural population in total population declined from 72% to 63% between 2000 and 2024. Despite a 20-fold increase in deposits over the past 25 years, SCBs' deposits in rural areas still lag behind the average accretion of about 28 times for all areas.

SCBs' credit disbursement in rural India is also behind that of semi-urban, urban, and metropolitan areas. The overall increase in outstanding credit in the last 25 years is 41 times, which outpaces the 28 times increase in outstanding deposits. The advances growth in rural and semi-urban segments is lower compared to growth in urban and metro segments.

Banking expert V Viswanathan observed that deposit growth is less than advances growth across all segments. He did not mention any specific reasons for the low deposit growth in rural and semi-urban segments. However, regional rural banks and smaller local banks in rural areas have experienced the weakest deposit growth compared to semi-urban, urban, and metropolitan banks over the last 25 years, mainly due to lower economic activity, limited financial inclusion, and slower population growth in rural regions.

The emergence of retail may explain the growth of advances in urban and metro areas. The credit-deposit ratio across population groups rose to 80% in 2025 from 56% in 2000, indicating a shift towards more credit disbursement relative to deposits.

SCBs' deposit growth in urban areas is also behind the average increase across population groups, with their deposits growing 26 times in the last 25 years. SCBs' deposit growth in semi-urban areas is behind the average increase, with their deposits growing 22 times in the last 25 years.

Deposit mobilization is less than potential in rural and semi-urban segments and to a certain extent in the urban segment. This underscores the need for strategic initiatives to boost deposit growth in these areas, ensuring financial inclusion and sustainable development.

In the last 25 years, the agricultural sectors of India have experienced slower growth in savings and credit compared to other demographic groups.