Banks' credit-deposit ratio on downward trend, at 79.5% on Sept 20

Banks' credit-deposit (CD) ratio – hovering around 80 per cent since September 2023 saw – declined and stood at 78.9 per cent for the fortnight ending October 4, 2024, compared to 79.5 per cent on September 20. Deposits rose 9.1 per cent compared to December 2023 and reached Rs 219.2 trillion as on October 4, 2024. Sequentially, they witnessed a significant uptick of 1.9 per cent. 

 

Meanwhile, in absolute terms, deposits have expanded by Rs 18.4 trillion over the last nine months. Banks have intensified efforts to strengthen their liability franchise, and are also sourcing funds via the certificates of deposits at a relatively higher cost. Credit offtake increased by 8.3 per cent compared to December 2023 and sequentially increased by one per cent for the fortnight ended October 04, 2024. In absolute terms, over the last nine months, credit offtake expanded by Rs 13.3 trillion to reach Rs 173.0 trillion as on October 04, 2024. 

 

Growth in credit staying ahead of growth in deposits had prompted the Reserve Bank of India to encourage banks to adopt innovative strategies to get more funds and narrow the gap between the two.

 

The challenge of deposit mobilisation for banks has been intensified by the upward trend in equity markets, which has attracted more household savings than lenders, Business Standard reported earlier. After Covid-19, households have increasingly shifted their investment to equities, directly as well as through mutual funds, at the expense of banks.