Deposits continues to lag credit growth, credit-deposit ratio at record high

Kolkata: Banks’ deposit growth continued to lag credit growth with the gap widening as much as 300 basis points as of March 15, Reserve Bank of India showed.

Deposits mobilisation grew at 10.8% year-on-year rate while advances rose 13.8%. In comparison, credit had expanded at 14.5% rate a fortnight back, while deposits had grown at 11.9%.

Consequently, the credit-deposit ratio rose to above 83% for the first time ever even as credit expansion slowed for the fortnight to March 15 as compared to preceding fortnight amid concerns over the West Asia crisis.

The CD ratio measures the percentage of a bank’s deposits used for lending. The rising ratio raises banks’ liquidity risk.

The CD ratio as of March 15 was recorded at 83.04%. The ratio was at 82.38% a fortnight back while the previous peak of 82.47% was seen on February 14.

In the period under review, bank credit expanded by Rs 18672 crore on net basis to Rs 207.7 lakh crore. Meanwhile, deposits contracted by 1.78 lakh crore to Rs 250.1 lakh crore, RBI data showed.