Deposit rates of banks have shown a slackened pace while lending seems to be showing a ositive growth trend. The aggergate deposit rate growth has seen a dip from 20.4% in December 2008 to 18% in December 2009.

According to Mr R.K. Bansal, Executive Director (Retail Banking), IDBI Bank, "Banks will have to take a view on hiking their deposit rates in the near-term. With inflation on the higher side, a negative yield on deposits is not something the depositor is going to take for long. This will impact credit growth in the future and with the Reserve Bank of India hiking repo and reverse repo rates by 25 basis points, liquidity is bound to become slightly tighter."

"Deposit growth has certainly slowed down while lending is picking up, says Mr S. Naren, CIO- Equities, ICICI Prudential AMC.

Chairman of Indian Bank, T M Bhasin said that the decline in deposit rates has been due to withdrawal of deposits by telecom companies in order to pay the Government for 3G licenses.

"Such withdrawals of deposits would total almost Rs 40,000 crore. They have also taken loans from banks to the tune of about Rs 60,000 crore. This money has gone to the Government's account with the RBI. It has not yet come back into the system," he said.