Bank deposits stood at Rs 211.9 lakh crore as of July 26, 2024, fortnightly data released by RBI showed. Banks have added deposits of Rs 7.2 lakh crore since March 2024, which is 3.5% more than what they added during the year-ago period.
At the end of July 2024, bank credit stood at Rs 168.1 lakh crore, an increase of Rs 3.8 lakh crore from March-end.The incremental loans are 2.3% more than what banks advanced during the year-ago period.
“Credit offtake continues to moderate and is converging with the deposit growth, highlighting the system-wide challenge in shoring up deposits. Growth in personal loans and MSMEs continues to account for this increase. Meanwhile, sequentially, credit growth remained flat. This slowdown can be attributed to RBI measures like higher risk weights on unsecured loans and a higher base effect,” said CareEdge Ratings analysts in a report.
“Deposits would continue to be prominent in FY25 as banks intensify efforts to strengthen their liability franchise. The banks are also sourcing funds via the certificates of deposits (at a relatively higher cost) which have shown significant traction. This focus aims to prevent constraints on credit uptake due to deposit growth,” the report said.
In year-on-year performance, credit saw a growth of 13.6%, which was relatively slow compared to last year, which saw a growth of 19.7%; while deposits saw a growth of 10.6%. Deposit growth, though showing improvement, has continued to lag credit growth in the past year.
The slowdown in credit has resulted in the credit-deposit ratio of banks remaining below the 80% mark for the second fortnight in a row. The merger of HDFC with HDFC Bank has pushed up the overall ratio of credit to deposits for the banking system. Excluding the loans advanced by HDFC, the credit to deposits ratio would be in the region of 77%.