The Credit to Deposit Ratio Remains Below 80% as Credit Offtake Lags by CareEdge Ratings
Synopsis
* Credit offtake and deposit growth have increased sequentially yet continue to remain significantly below last year’s level. The deposit growth continued to outpace credit offtake in the current fortnight, narrowing the credit-deposit gap. o As of July 25, 2025, credit offtake reached Rs 185.0 lakh crore, marking an increase of 10.0% year-onyear (y-o-y), significantly slower than last year’s rate of 15.1% (excluding merger impact). The slowdown can be attributed to a high base effect and muted growth across segments. o Deposits rose by 10.2% y-o-y, totalling Rs 233.5 lakh crore as of July 25, 2025, a decrease from 11.0% the previous year (excluding merger impact). This slower growth is primarily attributed to an unfavourable base effect, deposit repricing and a rise in alternative investment opportunities. * The Short-Term Weighted Average Call Rate (WACR) decreased to 5.41% as of August 01, 2025, from 6.47% on August 02, 2024, and currently stands nine basis points (bps) below the repo rate of 5.50%. This decline follows three successive repo rate cuts alongside liquidity management by the Reserve Bank of India (RBI).
Subdued Credit Offtake Persists with Modest Fortnightly Increase
Figure 1: Bank Credit Growth Trend (y-o-y% %, Rs Lakh crore)
* Credit offtake grew by 10.0% y-o-y for the fortnight ending July 25, 2025, a 0.2% improvement from the previous fortnight, with a sequential increase of Rs 0.38 lakh crore. However, this growth remained well below the 15.1% (excluding the merger impact) recorded in the same period last year. This slowdown reflects a combination of softer momentum and the impact of a high base. It is partly driven by slower growth in lending to corporates and unsecured personal loans, although retail credit continues to register some growth. On the corporate side, capital expenditure remains muted amid uncertainty over tariffs, while large corporates are also tapping alternative borrowing options at competitive rates, contributing to a moderation in loan demand.
Figure 2: Bank Deposit Growth Rate Inched Up for the Fortnight (y-o-y, %)
* Deposits increased by 10.2% y-o-y and marginally increased sequentially in the current fortnight, reaching Rs 233.5 lakh crore as of July 25, 2025, yet continues to remain lower than the 11.0% growth (excluding merger impact) recorded last year. Time deposits to others grew by 9.2% y-o-y to Rs 204.7 lakh crore, moderating from 10.9% growth in the corresponding period last year. Meanwhile, demand deposits saw a rise of 17.7% yo-y to Rs 28.7 lakh crore.
Figure 3: Credit-to-Deposit (CD) Ratio Remained Flat, Continues to Trail Below 80% – Incl. Merger Impact
* The Credit-Deposit (CD) ratio remained flat sequentially at 79.2% and continued to remain below the 80% mark for the ninth consecutive fortnight.
Figure 4: Share of Bank Credit and the Government Investments Remains Flat
* The credit-to-total-assets ratio and Government Investment-to-total-assets ratio remained flat at 72.0% and 26.2% respectively. Additionally, overall government investments totalled Rs 67.3 lakh crore as of July 25, 2025, reflecting a y-o-y growth of 6.5% and a sequential rise of 0.2%.
Levels of O/s Commercial Papers (CPs) and Certificates of Deposit (CDs) Remain Flat
Figure 5: Certificate of Deposit O/s Figure 6: Trend in Certificates of Deposit Issued. (Rs’000, Cr.) and RoI
Figure 7: Commercial Paper Outstanding Figure 8: Trend in CP Iss. (Rs’000, Cr.) and RoI
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