The rush to increase deposits by banks at the end of the quarter had some effect, contributing to suppressing the credit deposit ratio by 0.7 percentage points in the week ending October 4, 2004. However, deposits continue to increase year-on-year (year-on-year). Latest statistics from the Reserve Bank of India show that it is lagging behind credit growth.
This took the credit-to-deposit ratio to 78.9 per cent in the two weeks to October 4, up from 79.6 per cent as of September 20, according to official figures.
The two weeks ending Oct. 4 mark a record quarter (ending Sept. 30) in deposit mobilization, when banks tend to aggressively increase the number of depositors. Additionally, regulators are pushing for more deposits, which in turn is pushing deposit rates higher.
As per the latest RBI statistics, deposits grew by 1.9 per cent to Rs 219.2 crore from Rs 4,140 crore. As on October 4, credit utilization increased by 1 per cent to Rs 1.72 billion to Rs 173 million. However, deposit growth, at 11.8% year-on-year, continues to lag credit growth, which grew 12.8% year-on-year as of October 4.
Commercial banks’ deposit and borrowing rates are expected to widen due to a delayed impact relative to repo rates, stronger underlying credit demand, lower liquidity in the banking system, and widening spreads between credit and deposit growth. Ru
According to College Ratings, banks are making further efforts to strengthen their debt franchises and ensure that lagging deposit growth does not constrain credit availability, with deposit growth expected to play a leading role in FY25. It is expected that this will be achieved. “Furthermore, with the expected rate cut in the second half of FY25, some amount may flow back into the banking system, which could improve CASA ratio to some extent,” the rating agency said. India’s bank debt share will continue to rise gradually during the year. Fitch Ratings warned that its overall funding structure would deteriorate if it struggles to attract enough new deposits to support loan growth. The report states that high loan-to-deposit ratios (LDRs) could become a structural problem if declining deposit returns and evolving depositor preferences under inflationary pressures impede long-term deposit growth. said.
