New Delhi, May 15 -- A sharp jump in bank deposit growth to 13.5 per cent year-on-year (YoY) in March 2026-the highest since the withdrawal of Rs 2,000 notes in June 2023-masks deep structural weaknesses, according to a research note by Ambit Capital.

The Ambit Institutional Equities report, titled "One hike down, more to follow?", warns that the spike is transitory, driven by precautionary savings and year-end government spending, with average deposit growth for the first eleven months of FY26 at a modest 10.3 per cent.

Why the Spike Is Misleading

The March surge mirrors Covid-era behaviour, when uncertainty pushed households into demand deposits for liquidity rather than long-term savings.

Fiscal back-loading - the government's tend...