Bankers say market volatility and general lack of confidence has pulled investors towards this short-tenor product. While Kotak Mahindra Bank saw its inflows more than doubling on fixed deposits (FDs) in the last few months, the Bangalore-based ING Vysya Bank witnessed an over 50% increase in its short-term deposits. Axis Bank, on the other hand, reported a growth of 25-30% in the 20-20 version of FDs. India's second largest private bank, HDFC Bank was also on a northbound journey. The bank's deposits grew by almost 80% in the last nine months. In fact, in October alone, Indian banks raised term deposits worth Rs 94, 811 crore, according to the latest Reserve Bank of India (RBI) figures.

The high growth numbers, say bankers, is dangerous for the capital markets. As investors, in many cases, have withdrawn their funds from mutual funds and liquidated their stock portfolio to deposit with banks. According to K V S Manian, group head -- retail liabilities & branch banking, Kotak Mahindra Bank, the latest trend is indicative of investor outlook towards equity markets in the short-term. "We have in general seen a higher customer inclination for FDs. While the lower retail segment was always inclined towards the product, the attractiveness of current rates has enhanced their interest. However, in case of the high networth individual segment, there's a definite shift in attitude around this product of late," he said.