Banks' certificates of deposit fund-mop up more than triples in country

Strategy makes up for imbalance in banks' deposit and credit growth

Banks are tapping certificates of deposit (CD) – an instrument issued to raise funds from large investors – in a big way. CD issuances increased to nearly Rs 10 trillion in FY24 from Rs 2.90 trillion in FY22, a jump of 3.3 times.

In Q1 FY25, CD issuance increased by 66 per cent to Rs 2.65 trillion compared to Rs 1.60 trillion in Q1 FY24, said SBI Research in a report recently.

The uptick in CD issuance is to make up for the imbalance in banks’ deposit and credit growth. Bank’s credit-to-deposit ratio – the amount of funds given out of every Rs 100 raised through deposits – has hovered around 80 per cent since September 2023.

Banks have also been more active in securitisation – selling assets to generate liquidity. Securitisation transaction volumes in Q1 FY24 reached Rs 8,500 crore compared to Rs 10,000 crore in for the whole of FY23.