Bank deposit growth in India outpaces credit offtake for 1st time in last 30 months

New Delhi, Nov 5 (IANS) Bank deposits rose at 8.6 per cent compared to December 2023, reaching Rs 218.1 lakh crore (as of October 18), a report showed on Tuesday, adding that on an annual basis, deposit growth has outpaced credit offtake for the first time in the last 30 months.

This growth can be attributed to rising term deposit rates of Scheduled Commercial Banks (SCBs), said the report by CareEdge Ratings.

In absolute terms, deposits have expanded by Rs 17.3 lakh crore over the last nine months.

“Deposits have remained prominent in FY25 as banks have intensified efforts to strengthen their liability franchise. The banks are also sourcing funds via the certificates of deposits at a relatively higher cost,” the report mentioned.

The credit-deposit (CD) ratio has been hovering around 80 per cent since September 2023. The CD ratio witnessed a marginal uptick reaching 79.0 per cent for the fortnight ending October 18, compared to 79.5 per cent in December 2023.

Additionally, when comparing growth rates with December 2023, deposit growth has continued to outpace credit offtake.

Credit offtake increased by 8.0 per cent compared to December 2023, reaching Rs 172.4 lakh crore as of October 18.

“Mortgages and MSMEs account for the bulk of this increase. However, the growth slowdown compared to last year can be attributed to a higher base effect due to the merger and RBI measures such as higher risk weights and the proposed LCR norms,” the report mentioned.

The Short-term Weighted Average Call Rate (WACR) has decreased to 6.43 per cent as of October 18, 2024, compared to 6.74 per cent as of October 27, 2023, indicative of surplus liquidity.

On year-on-year (YoY) performance, credit saw a growth of 11.7 per cent, slower than the last year’s rate of 19.7 per cent. Meanwhile, deposits saw a growth of 11.8 per cent, compared to 13.4 per cent last year.

–IANS

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