Gap in credit and deposit growth narrows
deposit growth in the banking system has narrowed by more than half a percentage point toward the end of September, mirroring the impact of the regulatory nudge to boost deposits and de-risk the broader financial system where demand for loans remains undiminished.
The gap narrowed to 162 basis points in the fortnight ended September 20, the latest Reserve Bank of India (RBI) data showed, from 220 basis points two weeks ago. One basis point is a hundredth of a percentage point.
As on September 20, year-on-year credit growth print was at 13.02% against 13.3% a fortnight ago, while the latest deposit growth was higher — at 11.4% versus 11.1%.
The central bank's state of the economy report for September had also observed that the credit deposit gap was beginning to narrow, after having widened for a significant period of time.
To be sure, banks had struggled to mobilise large deposits, whereas credit demand climbed much faster over the past two financial years.
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