Mandating low deposit rates, a form of financial repression, allows banks to raise deposits cheaply and makes investment in government securities profitable but limits credit access. Using regulatory data, we exploit India’s 2011 deregulation of savings deposit rates to show that deposit rates increase after deregulation, more so for banks with low market power; consequently, deposits increase, and deposit maturity contracts. These banks shift from low-yielding government securities to loans, and loan maturity shortens. Credit to households and firms increases. A structural model demonstrates that high-market power banks restrain deposit growth. Deregulation improves financial intermediation, but market power limits gains.