I think, you are right. Even the traditional risk wary middle income customers in T2 and T3 towns are also now preferring the MF than FDs. Looks like HDFC is already trying to sell some of their loan portfolio. The Solution could be change in the tax treatment by government for FDs. In case of FD, you are taxed at slab and are forced to pay the tax every year when compared to Capital gains tax which are at a lower rate and you need to pay only when you capitalize it. The cash may be in the system with securities market but still FDs provide the banks with cheaper source with clear view of the liquidity requirement.
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