Saving Deposits at 37%: Stable Base or Declining Investor Confidence?

As of Saun End, 2082 (Mid-August 2025), savings deposits account for 37.37% of Nepal’s total banking deposits, making them the second-largest source of funding after fixed deposits. This figure demonstrates that households and businesses still rely heavily on savings accounts as a liquid and easily accessible form of storing wealth. Compared to fixed deposits, savings deposits typically offer lower returns (weighted average 3.07%), but their flexibility provides customers with quick access to funds, making them an important pillar of the banking system.

From a stability perspective, the large share of savings deposits provides banks with a low-cost and steady funding base. Since these deposits carry lower interest costs than fixed deposits, they help banks maintain profitability while ensuring liquidity for day-to-day operations. The presence of more than 6 crore deposit accounts across the financial system also highlights widespread financial inclusion, with savings deposits acting as the entry point for most customers into the formal financial system.

However, the declining proportion of savings deposits compared to fixed deposits raises questions about investor sentiment. With fixed deposits now making up nearly 48% of the total, depositors appear increasingly drawn to higher guaranteed returns, even if it means locking in their money for longer periods. This shift suggests that households may have less confidence in leaving funds in low-yield savings accounts, especially amid inflationary pressures and economic uncertainty. The trend could also reflect greater competition from other investment opportunities, such as cooperative schemes or informal lending, which promise higher returns despite higher risks.

For banks, a falling reliance on savings deposits could mean rising funding costs and reduced flexibility in liquidity management. A strong base of savings deposits usually gives banks room to maneuver in times of stress, but an overdependence on fixed deposits could make the system more vulnerable if deposit growth slows or credit demand remains high.