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Banks are unlikely to undertake major hikes in deposit rates: Expert

With the reduction in statutory liquidity ratio and open market operation bond purchases, RBI is pushing liquidity into the system

illustration, deposit rates, banks
Some analysts believe that reduction in SLR will add Rs 25,000-30,000 crore to the banks’ liquidity bucket every quarter

Pick-up in credit growth is definitely a positive for banks. According to the Reserve Bank of India’s (RBI’s) data, as of December 21, the loan book of all scheduled banks rose 15 per cent year-on-year.  But on the flip side, credit-to-deposit ratio touched its highest level of 79 per cent in December 2018, amid slower growth in deposits (9 per cent).    Does this indicate a challenging situation for banks in the near term amid an expected rise in deposit rates, which would weigh on their profitability? Probably, not.  ALSO ...