Domestic saving rate stood at nearly 31% in FY13: RBI

Mumbai, June 27: Gross domestic savings as a proportion to GDP fell from a high of 36.8 per cent in FY08 to 30.8 per cent in FY13, according to the Reserve Bank.

The apex bank, in its half-yearly Financial Stability Report (FSR) released today, blamed the sharp fall in domestic savings on the steep decline in financial savings of households which dropped from 11.6 per cent of GDP in FY08 to a poor 8 per cent in FY13.

The report noted that the investor shift from financial assets to real estate and gold has been stark. High inflation, which hovered over 8 per cent last fiscal, low penetration of banking services, poor credibility of financial entities due to some cases of mis-selling and frauds, low post-tax return on bank deposits, negative/low real interest rates are some of the issues that need to be addressed to redirect non-financial savings towards financial savings, it said.

Describing the launch of inflation indexed bonds as a positive step, the report said more such instruments are needed to encourage savings habit among the households. The bonds were launched early this month to help retail investors hedge themselves against high inflation and also to wean away the public from investing in gold and other non- productive instruments.

PTI