Banks’ efforts to mobilize deposits, including offering higher interest rates over a period of one to two years, appear to be bearing fruit, according to the latest RBI data on upcoming bank statements in India.
In the two-week report ending October 4, 2024, banks’ deposit mobilization significantly exceeded credit transactions. It wasn’t until several quarters later that deposit growth decisively outpaced credit growth. This could also help correct the high credit deposit ratio in the banking system.
Sweeped deposits of all scheduled banks totaled Rs 4,22,170 crore against credit reduction of Rs 1,75,363 crore in the last two weeks’ report.
Fitch Ratings officials said in a report that expanding the depositor base from the top 15 urban centers could increase inflows and help banks retain deposits. said.
Cumulative insurance repo interest rate
In line with the 250 basis points (bps) hike in the cumulative policy repo rate since May 2022, the weighted average domestic term deposit rate (WADTDR) for new and outstanding deposits of Scheduled Commercial Banks (SCBs) has increased by 190 bps to 243 bps. . From May 2022 to August 2024, respectively.
At the same time, SCB’s weighted average lending rate (WALR) for new and outstanding rupee loans increased by 190 bps and 119 bps, respectively.
CareEdge Ratings stakeholders include Sanjay Agarwal, senior director; and associate director Saurabh Bhalerao said in a report that the bank is making further efforts to strengthen its debt franchise and ensure that slow deposit growth does not constrain credit access.
Furthermore, with interest rates expected to be cut in the second half of FY2025, some of the money will flow back into the banking system, potentially improving the CASA (current account, savings account) ratio to some extent.
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Published October 17, 2024
