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How did the coronavirus pandemic affect household savings, deposits and loans?

The Reserve Bank of India (RBI) released its preliminary estimate of household financial savings last week. According to it, the corona virus epidemic has led to a sharp decline in bank deposits, pension funds, life insurance funds and cash deposits. The debt of the households is also projected to increase. Apart from this, there has also been a decline of 45 percent in bank deposits between June and December 2020. Know the detailed analysis here. Big drop in domestic economic savings due to corona epidemic

According to RBI, at the beginning of the pandemic, there was a jump in domestic financial savings in the first quarter of 2020-21, but it saw a decline in the next two quarters. In the quarter ended September, household savings were 10.4 percent of GDP, while in June It was 21 percent in the quarter ended 2015. Similarly, in the third quarter (October to December) it came down to 8.2 percent. It has particularly affected people.info

Decline in the economic wealth of families

According to RBI, in the third quarter of last year, the economic wealth of households fell sharply to Rs 4,44,583 crore. This figure was Rs 4,91,906 crore in the July-September quarter, while it was Rs 8,15,886 crore in the April-June quarter.#2

There has also been a big decline in bank deposits

There has also been a big decline in people’s bank deposits due to the Corona epidemic. According to the RBI, the ratio of bank deposits to GDP has come down to 3.0 percent in the December quarter. This ratio stood at 7.7 per cent in the September quarter. This means bank deposits stood at Rs 3,67,264 crore in the September quarter, which came down to Rs 1,73,042 crore in December. Due to this the banks have also suffered huge financial loss.

This has been a major reason for the decrease in bank deposits

Indian Express According to banking analysts, the biggest reason for the decrease in bank deposits has been people withdrawing money from banks to meet basic needs due to lack of employment in the pandemic. Bank deposits in January-March 2020 amounted to Rs 4,55,464 crore Rupee, which fell to 1,25,848 in April-June. It is clear that as the outbreak of the epidemic increases, bank deposits start declining. #3

Big fluctuations were seen in the cash with the families

According to the RBI, due to the Corona epidemic, there has been a big fluctuation in the cash with the households. While domestic cash was Rs 2,06,889 crore in the April-June quarter, it decreased to Rs 17,225 crore in the July-September quarter. In the October-December quarter, it has seen a jump once again and it has increased to Rs 91,456 crore. It is clear that the ups and downs of the epidemic have had a huge impact.Lockdown

People have increased cash after lockdown

Between March and June, there was an increase of Rs 3.07 lakh crore in cash with the people after the announcement of the nationwide lockdown implemented by the government in March last year. Cash increased from Rs 22.55 lakh crore to Rs 25.62 lakh crore. As per the latest RBI data, the total cash currently held by people is Rs 28.78 lakh crore. #4

Changes were also seen in the insurance industry due to Corona epidemic

The insurance industry has also seen a big change due to the corona pandemic. There was a 27.9 per cent decline in new business premium income of life insurance companies in April and May 2020. However, premium income for the full financial year 2020-21 improved and increased by 7.49 per cent. March quarter of FY20 The life insurance corpus of the households had come down to only Rs 33,549 crore in the year.

Increase in life insurance fund with increasing deaths in epidemic

As the graph of deaths in the corona epidemic increased, so did the increase in the life insurance fund. This fund increased from Rs 33,549 crore to Rs 1,23,324 crore in the June quarter, Rs 1,42,422 crore in the September quarter and December of FY 2021. It touched Rs 1,56,320 crore in the quarter. Due to this, the life insurance industry registered a growth of 9 per cent in business in the last financial year. This increase has reached 17 percent in the current financial year.#5

Domestic investment in equities declined due to corona epidemic

The stock markets have seen a steady improvement with the Sensex rising from 28,265 at the beginning of April 2020 to now above 52,000. After the fall in March and the beginning of April 2020, the market improved, but domestic investment in equities declined. Equity holding had increased to Rs 18,599 crore in the June quarter, but declined to Rs 8,291 crore in September and Rs 5,307 crore in December.

Small savings schemes did not make any difference

Household savings in small savings schemes such as post office and National Savings Certificates remained unchanged at Rs 75,879 crore in the three quarters of FY21. The main reason for this is that most of these schemes have a lock-in period.#6

Domestic debt to GDP ratio increasing

According to RBI, the domestic debt to GDP ratio, which is based on select financial instruments, has been rising steadily since the end of March 2019. It increased from 37.9 per cent at the end of December 2020 to 37.1 per cent at the end of September 2020. Credit to households to the banking sector declined by Rs 1,38,472 crore in the June quarter of 2020, but increased to Rs 2,18,216 crore in December reached at. This has been a major impact of the pandemic.

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