At the times of financial instability in the market, depositors are considering the old PSU banks as the safe place to park their funds. As a result the foreign banks have witnessed a huge slowdown in their deposit base.

The PSU banks that were once considered out of date by the depositors have become the preferred place for most investors after the global financial meltdown. In the past few years, PSU banks have improved their balance sheets by picking up tricks in marketing, advertising and customer service from the multinational banks.

These banks have always faced a large number of problems including complaints about the careless retail service, inflexible trade union and others. However the global slowdown has brought new opportunities for the government owned banks.

The PSU banks have witnessed a deposit growth of 24% in the FY 09 against 23% growth in FY 08. On the other hand, foreign banks only reported a 7.8% growth in their deposit base during the previous fiscal as compared to 29.1% in 2007-08.

An executive with the PSU bank said, "With most banking biggies including Citibank being affected by the global slowdown, consumers in India are turning to the PSU banks, which have gained significantly in the last few months."

However the economic slowdown has affected the overall deposit growth that fell down to 20% in 2008-09 against 22.5% during the fiscal 2007-08.

Meanwhile the inflation rate that touched double digits in 2008-09 also induced PSU banks to offer high interest on their various fixed deposits. Further the volatility in the stock market attracted the investors towards the bank deposits. "Investors opted for bank deposits to park their funds especially with the uncertainty in the stock and real estate markets," said J. M.Garg, Chairman and Managing Director, Corporation Bank.

Although the stock market has improved, banks are yet expected to witness a high growth in their deposit base during the next two quarters.

There is a general belief that people would park their savings with the banks in the current scenario. Thus the bank deposits are going to swell in the coming times, say experts in the banking sector.