Seasonality rises in demand deposits, banks' cash in hand, says RBI report

While seasonality in India’s macroeconomic indicators remained broadly stable, several key variables — like banking aggregates, vegetable prices, industrial output and payment systems — are showing more seasonal fluctuations, according to a Reserve Bank of India study.

 

In a report titled Seasonality in Key Economic Indicators of India, it was highlighted that seasonal variations are particularly high in demand deposits, banks’ cash in hand and balances with the RBI, and narrow money. Seasonal variation in demand deposits stood at 5.5 percentage points in 2024–25, while cash in hand and balances with the RBI hit a decade-high 8.0 percentage points.

 

Seasonality, a fundamental component of economic data alongside trend and cyclical movements, reflects recurring patterns arising from weather, production cycles, holidays and institutional behaviour.

 

Most monetary and banking indicators display stable seasonal patterns, with 11 of 14 variables peaking in March or April and several troughs occurring in August, it said. Among payment systems, most indicators peak in March except card payments. RTGS declined in February, paper clearing in September and retail electronic payments in November. REC showed the highest seasonal variation in 2024–25 at 31.7 percentage points.

 

“Reserve money, narrow money and bank credit typically peak in March, whereas broad money and aggregate deposits of scheduled commercial banks (SCBs) reach their seasonal high in April. Within aggregate deposits, demand deposits show a seasonal surge in March, while time deposits peak in April. Loans, cash credits and overdrafts by SCBs and non-food credit follow a similar seasonal peak in March,” it said.

 

It also mentioned that the seasonal trough occurs in February for aggregate deposits and in August for bank credit. Banks’ investments tend to be higher in September and decline in March, and currency in circulation increases seasonally in April and tapers off in September.

 

Headline Consumer Price Index (CPI) inflation typically peaks in October and reaches its seasonal low in March, driven largely by food and beverages. Vegetables — especially tomatoes, onions and potatoes (TOP) — show the most intense seasonal swings.

 

“Potato and onion prices rise in November, with seasonal pressures easing by March and May respectively, while tomato prices increase in July and moderate by March,” the report said.

 

Protein items also show notable seasonality, while clothing, housing and miscellaneous groups display mild fluctuations. Meanwhile, industrial production rises in March and moderates in April, tracking manufacturing trends. Mining peaks in March and electricity generation in May. Under the IIP’s use-based classification, consumer durables peak in October on festive demand, while non-durables hit a high in December. Capital goods, infrastructure goods and most core sectors peak in March. Mining shows the highest seasonal fluctuation among major IIP components, while coal has the widest variation among core industries.

 

Services indicators also exhibit strong seasonal swings, with passenger vehicle sales peaking in October, cargo and railway traffic rising in March, domestic air travel peaking in December and international travel in January. Passenger vehicle sales had the widest seasonal factor range — 27 percentage points in 2024–25.

 

Exports and imports typically peak in March, with exports dipping in November and imports in February. Seasonal fluctuations are more pronounced in exports.

 

Further, seasonal variation is higher in gross domestic product (GDP) than gross value added (GVA), partly due to net tax volatility. Quarterly GDP and GVA peak in Q4 and trough in Q2, the report noted.