New Delhi [India], November 25 (ANI): India’s banking system continues to display strong and predictable seasonal patterns, with the financial year-end remaining the most significant driver of activity, according to the Reserve Bank of India’s latest bulletin.
The RBI study shows that March remains the dominant seasonal peak for most banking variables, reflecting intensified financial operations as institutions close their books. Bank credit, non-food credit, and demand deposits experience some of the sharpest surges at year-end, while reserve money and narrow money (M1) also spike in March, indicating elevated liquidity needs.
While many indicators peak in March, aggregate deposits — driven primarily by time deposits — reach their seasonal high in April. Demand deposits recorded the highest volatility among banking indicators, with seasonal fluctuations of 5.5 percentage points in 2024–25.
One notable trend is the widening seasonal fluctuation in banks’ cash in hand and balances with the RBI, which reached a decade-high range of 8 percentage points. This suggests sharper short-term liquidity adjustments during the year-end period.
In contrast to credit and deposits, banks’ investments show a seasonal low in March and peak in September, reflecting portfolio adjustments aligned with regulatory requirements and liquidity conditions. Despite pandemic-era volatility, banking sector seasonality has remained largely stable and predictable, with only a few indicators, such as cash balances, showing progressively broader swings.
The RBI Bulletin also highlighted seasonal trends in the Consumer Price Index (CPI). Headline CPI peaks in October and falls to its seasonal low in March. Vegetables — particularly tomatoes, onions, and potatoes — exhibit the highest price volatility and contribute significantly to seasonal food inflation. Non-food categories such as clothing and housing recorded only marginal seasonal effects.
Wholesale price indices peak in November, though their seasonal variation remains comparatively mild. (ANI)
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