Public Sector Banks' Pension Deposits Drop 87% in Five Years

Public sector banks (PSBs) have recorded a steep drop in pension fund deposits over the past five years. As per the Business Standard reports, the figure stood at ₹22,516 crore in March 2020 but had fallen to just ₹2,969 crore by March 2025. This marks a fall of almost 87% within half a decade.

Rise in Overall Banking Deposits

While PSBs saw this decline, the overall banking system gained from pension funds. Deposits with all scheduled commercial banks (SCBs) rose more than twofold during the same period, reaching ₹66,883 crore by March 2025. The increase shows that the segment expanded even as PSBs lost ground.

Erosion in Household Deposits

PSBs have also lost share in household deposits. In FY25, they accounted for 50.3% of incremental deposits from households, compared to higher levels earlier. As per the reports, their share of total household deposits declined from 70.6% in March 2020 to 63% by March 2025, showing changing depositor preferences.

Drop in Government Deposits

The proportion of government deposits held by PSBs has also slipped. Their share fell from 77.5% in March 2020 to 73.6% by March 2025. During the same time, private banks increased their share of government deposits from 22.1% to 25.6%.

As per news reports, in June 2025, Union Finance Minister Nirmala Sitharaman advised PSBs to focus on strengthening deposit mobilisation. She also highlighted the need to expand corporate lending in productive sectors while maintaining risk management and protecting net interest margins (NIMs).

Read More: Kerala Govt To Spend ₹2,000 Crore on Offering DA/DR Hike to State Employees and Pensioners!

Conclusion

Pension funds, household savings, and government deposits have all shifted away from PSBs over the last five years. Private banks have gained a larger role in this deposit base.

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