Lending rose faster than deposits in the December 27 fortnight
Lending rose faster than deposits in the last fortnight of 2024 with fortnightly growth in a year when credit and deposits have not moved ion tandem and banks struggling to raise deposits to meet credit demand.
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While credit grew by 11.16 percent year-on-year, deposits increased by 9.8 percent as of December 27, according to the latest figures released by the Reserve Bank of India, released on Thursday.
Aggregate Bank deposits amounted to Rs 220.6 lakh crore as of December 27, while total bank credit amounted to Rs177.43 lakh crore. At these levels the credit deposit ratio is at 80 percent compared to 79 percent in the same period a year ago.
Both credit and deposit growth have slowed down in the current fiscal. Credit growth which has been led by retail loan growth has slowed down because of the regulatory clampdown in unsecured lending and credit cards outstanding. The RBI has imposed higher risk weights on these exposure of banks. Moreover even Bank loans to NBFCs have slowed down because of higher capital requirements on such loans.
As for the deposits, in spite of raising deposits rates since May 2022 after the central banks started raising its benchmark repo rates, deposits have not picked up pace as savings are now moving top other alternate instruments like stocks and mutual funds which are offering higher returns.
