The global financial turmoil that created uncertainty in the financial sector has not only made the banks and financial firms cautious in their approach but also made an investor risk averse. As a result of which banks have witnessed increased amount of bank deposits in the current fiscal.

The uncertainty along with a rise in deposit rates has been the cause for rising bank deposits. The bank deposits have recorded a growth of 25% during the current fiscal. The unfavorable conditions in the stock market have attracted the investor more towards the bank deposits as they yielded definite returns against the investment made on stocks. But now as the deposit rates of the banks are falling, investors may shift their preference.

Nevertheless analysts anticipate that investors will continue to opt for bank deposits even as there are signs that deposit rates would decline. This view has been attributed to the lower risk association with the bank deposits. In an environment of financial crisis, investors are becoming more risk averse. They want to play safe in this state of slowdown.

An investment analyst Surya Bhatia said, "Bank deposits are considered among the safest investment options and even if we see interest rate coming down, we will continue to see deposits surging in the coming months." Axis Bank's Vice President, Saugata Bhattacharya said that the increase in the bank deposit have also eased the liquidity conditions in the system.

Over the last few years, deposit growth has been slow and only following the crisis this rate has seen some increase. "There has been a surge in deposits in the last few months," informed Saugata Bhattacharya. In fact a senior banker said that, "This year, credit has slowed down while deposits have seen a huge growth."

Earlier when the banks' deposits were not increasing, the finance ministry had asked banks to focus on raising their deposit base in order to keep in line with the growth rate of credit.