The latest data from the Reserve Bank of India reveals a noteworthy shift in the distribution of banking activity across the country. While metro cities continue to dominate in terms of deposit mobilisation, rising from 50.9% in March 2020 to 53.2% in March 2025. Meanwhile, their share in bank credit has seen a decline from 63.5% to 58.7% during the same period.
According to the latest Reserve Bank of India data, the share of bank deposits held in metro cities has increased from 50.9% in March 2020 to 53.2% in March 2025. This reflects a continued concentration of financial savings in urban centres. However, this concentration is not absolute. While metros have gained deposit share, their dominance is slowly being challenged by the rising participation from semi-urban and rural areas.
Interestingly, even as deposits in metro cities increased, their share in bank credit fell from 63.5% in March 2020 to 58.7% in March 2025. This suggests a gradual shift in lending patterns and a more even distribution of credit across the country. It also highlights the changing focus of the banking sector towards new geographies and emerging borrower profiles.
A major driver of this shift is the growing focus on personal loans. These loans accounted for 47.8% of total bank credit in March 2025, a significant rise from 41.5% in 2020. Within this, the proportion of female borrowers also improved from 22% to 23.8%, pointing to increasing financial inclusion and empowerment.
By March 2025, total individual deposits reached ₹2,34,50,000 crore ($2.7 trillion). Metros still held the largest share at ₹24,80,000 crore ($289.72 billion), which is 53.3% of the total. Urban centres followed with ₹49,00,000 crore ($572 billion), or 20.9%. Semi-urban regions held ₹36,20,000 crore ($422.90 billion), accounting for 15.4%, and rural areas contributed ₹24,40,000 crore (10.4%). This data indicates that while metros remain strongholds, other regions are steadily building their deposit bases, supported by population migration and policy emphasis on financial inclusion.
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The growth of personal loans at 13.2% in FY25 has made them the fastest-expanding credit category. Over five years, their share in overall bank credit has increased from 24.1% to 31%. This trend demonstrates the evolving nature of credit consumption in India, driven by rising aspirations and changing demographics.
Affordability has improved in key lending categories. For instance, the proportion of housing loans carrying interest above 9% dropped from 54.5% in 2020 to 36.8% in FY25. Similarly, consumer durable loans with interest above 11% declined from 50.3% to 47.4%, making credit more accessible for the middle class.
The RBI data highlights a subtle but steady transformation in the Indian banking ecosystem. While metro cities continue to attract the bulk of deposits, the lending focus is expanding beyond urban cores. The rising share of personal loans and increased female participation point to a more inclusive credit environment. This rebalancing suggests a move towards more geographically and socially diverse financial growth.
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Published on: Jun 4, 2025, 3:39 PM IST
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