Banks added over ₹2 trillion more in deposits than loans in 2024
Subscribe to enjoy similar stories. MUMBAI : Banks in India added more deposits than loans last year, leading to a softening of the credit-deposit ratio, even as deposit growth failed to keep pace with advances, showed latest data from the Reserve Bank of India (RBI). The gap between fresh deposits and non-food credit widened to over ₹2 trillion in 2024, higher than ₹1.3 trillion in the previous year.
Non-food credit is bank credit adjusted for loans given to the Food Corporation of India (FCI). In 2022, per RBI data, banks added more loans than deposits and the gap between the two was ₹2.6 trillion. Data for 2023 exclude the impact of the merger of HDFC Ltd into HDFC Bank that added to the banking sector's loans and deposits.
Lenders were troubled by a deposit crunch in 2024, as credit growth outstripped growth in deposits. A subsequent cooling of credit growth has helped a convergence of these two, although credit outstripped deposits yet again in December. Non-food credit growth was 11.1% in 2024, while deposit growth stood at 9.8% in the same period.
When seen on a full-year basis, higher fresh deposits compared to loans in 2024 has pushed the incremental CD ratio to 89.5%, as against 94% in 2023. The CD ratio indicates how much of a bank’s deposit base is being utilized for loans. A private sector banker who did not wish to be named said that in absolute terms, deposit accretion will be higher because the denominator is higher, but the loan-to-deposit ratio situation is still worsening because, ideally, any ₹100 deposit would mean a bank can lend only ₹75-76 against it.
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