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Synopsis

* Credit and deposits are now growing in line with each other after deposit growth surpassed credit offtake for the first time in 30 months last fortnight. Additionally, when comparing growth rates with December 2023, deposit growth has continued to outpace credit offtake.

* Credit offtake increased by 9.3% compared to December 2023, reaching Rs 174.4 lakh crores as of November 01, 2024. The growth slowdown compared to last year can be attributed to a higher base effect due to the merger and RBI measures such as higher risk weights and the proposed LCR norms.

* Deposits rose at 9.8% compared to December 2023, reaching Rs 220.4 lakh crore as of November 01, 2024. This growth can be attributed to rising term deposit rates of Scheduled Commercial Banks (SCBs).

* The Short-term Weighted Average Call Rate (WACR) has decreased to 6.50% as of November 01, 2024, compared to 6.77% as of November 10, 2023, indicative of surplus liquidity.

The Bank Credit Growth Rate shows a marginal uptick for the Fortnight

Figure 1: Bank Credit Growth Trend (y-o-y %, Rs. Lakh crore)

* Credit offtake increased by 9.3% compared to December 2023, while increasing sequentially by 1.2% for the fortnight ended November 01, 2024. In absolute terms, over the last 10 months, credit offtake expanded by Rs 14.6 lakh crore, reaching Rs 174.4 lakh crore as of November 01, 2024. The slowdown compared to last year can be attributed to a higher base effect, commentary on the reduction of a high credit-to-deposit ratio, and RBI measures such as higher risk weights, and the proposed LCR norms.

Figure 2: Bank Deposit Growth shows a marginal uptick (y-o-y %)

* Deposits rose to 9.7% compared to December 2023, reaching Rs 220.4 lakh crore as of November 01, 2024, and sequentially witnessed an uptick of 1.1%. Meanwhile, in absolute terms, deposits have expanded by Rs 20.6 lakh crore over the last 10 months. Deposits have remained prominent in FY25 as banks have intensified efforts to strengthen their liability franchise and have offered higher term deposit rates. Additionally, banks are sourcing funds via the certificates of deposits at a relatively higher cost.

Figure 3: Credit-Deposit (CD) Ratio Hovers Just Below 80% – Includes Merger Impact

* The CD ratio has been hovering around 80% since September 2023. The CD ratio witnessed a marginal sequential uptick reaching 79.1% for the fortnight ending November 01, 2024.

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