Complacency alert: The recent shortfall in deposits is a wake-up call for Indian banks
1 week, 3 days ago

Complacency alert: The recent shortfall in deposits is a wake-up call for Indian banks

Live Mint  

Since 1998, there have been at least six occasions when deposit growth trailed credit growth. In the previous five instances, the deposit-credit growth alignment was a result of both a rise in deposit growth and a fall in credit growth. If the banking system aspires to go back to the 14-16% deposit growth rate before 2016, it may have to treat depositors differently. A deposit crunch per se does not impact credit growth: The popular narrative that a deposit crunch prevents credit growth is inaccurate and not based on any fundamental understanding of banking economics. Former Reserve Bank of India governor Shaktikanta Das expressed several times his worries about deficiencies in banks’ deposit mobilization, given how depositors are increasingly turning to capital markets and other financial intermediaries.

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History of this topic

India’s banking credit growth to remain subdued in FY2026, lowered forecast: ICRA
1 week ago

India’s banking credit growth to remain subdued in FY2026, lowered forecast: ICRA

Live Mint  

New Delhi, January 2 : Credit rating agency ICRA has lowered its banking credit growth estimate for FY2025 to 10.5-11.0 per cent, down from its previous forecast of 11.6-12.5 per cent. For FY2026, ICRA anticipates a further slowdown in credit growth, estimating a range of 9.7-10.3 per cent, influenced by the high CD ratio and upcoming changes in the liquidity …

At India’s largest bank, all eyes on premium customers
2 months ago

At India’s largest bank, all eyes on premium customers

Live Mint  

Mumbai: State Bank of India may be taking the higher road as it joins the scramble for customer funds without resorting to a rate war, but its outlook signals an extended industry struggle for deposit growth. India’s largest bank on Friday tempered its guidance on deposit growth to 10-11% from 12-13% for 2024-25 as customers might have now found more …

Balancing Regulation and Credit Flow: Crucial for Financial Stability
2 months ago

Balancing Regulation and Credit Flow: Crucial for Financial Stability

Live Mint  

The article discusses the impact of stricter provisioning norms for shadow banks and tighter regulatory curbs on loan disbursement by certain microfinance institutions (MFIs). It highlights the importance of striking a balance between regulation and credit flow to avoid negative long-term impacts on financial inclusion. The article also addresses concerns about the rising share of personal loans as a percentage …

SBI Dismisses Concerns About Flagging In Banking Sector's Deposit Growth
4 months, 2 weeks ago

SBI Dismisses Concerns About Flagging In Banking Sector's Deposit Growth

News 18  

State Bank of India, India’s largest lender and public sector bank, in its report, has dismissed the concerns about the flagging in the banking sector’s deposit growth. The report highlighted that in the Financial Year 23, the banking sector, particularly All Scheduled Commercial Banks, registered the highest absolute growth in both deposits and credit since 1951-52. Meanwhile, the credit expanded …

Indian banks well placed to ride on economic growth: Moody’s
6 months, 4 weeks ago

Indian banks well placed to ride on economic growth: Moody’s

The Hindu  

Indian banks and non-bank finance firms are well placed to seize opportunities from India’s strong economic prospects through lending growth in sectors like infrastructure, energy transition, manufacturing, small businesses and retail, Moody’s Ratings said on Wednesday. Moody’s said credit quality of India’s financial system has strengthened over the past 3-4 years due to record-high profitability, low delinquencies and stable domestic …

Credit growth trajectory likely to slow down to 12-14% YoY over FY25-27, says Emkay Global
9 months, 2 weeks ago

Credit growth trajectory likely to slow down to 12-14% YoY over FY25-27, says Emkay Global

Live Mint  

India’s banking sector is expected to face a slowdown in credit growth and with banks exhausting strategies to sustain margins, the imperative for mobilizing deposits emerges, analysts said. The credit growth trajectory is expected to slow down to 12-14% year-on-year over FY25-27E from the current 16.5% YoY, according to Emkay Global Financial Services. The overall deposit growth and more so …

Keep an eye on these economic indicators in 2023
2 years ago

Keep an eye on these economic indicators in 2023

Live Mint  

Global headwinds, tightening monetary policy and the lingering effects of the pandemic have combined to create a gloomy global outlook. In its December bulletin, the Reserve Bank of India said that with balance of risks being tilted towards a darkening global outlook and emerging markets appearing more vulnerable, the Indian economy needs support from domestic growth drivers. Sectoral deployment of …

Indian banks to see record credit growth of over ₹19 trillion in FY23: Icra
2 years ago

Indian banks to see record credit growth of over ₹19 trillion in FY23: Icra

Live Mint  

New Delhi: Indian banks are likely to witness a record high credit growth, surpassing the ₹19 trillion in the current fiscal year, domestic rating agency Icra said on Monday. Further, the growth momentum is expected to remain strong in FY2024 as well, even though rising interest rates and tight liquidity conditions could moderate the growth,” said Anil Gupta, senior vice …

RBI says bank credit growth accelerates to 17.2 % in September quarter: Report
2 years, 1 month ago

RBI says bank credit growth accelerates to 17.2 % in September quarter: Report

Hindustan Times  

Bank credit growth improved to 17.2 per cent in the September quarter 2022 from 7 per cent in the year-ago period, reflecting pick-up in economic activities. Bank credit growth improved further to 17.2 per cent in September 2022 from 14.2 per cent a quarter ago and 7 per cent a year ago, it said. Aggregate deposits growth, which remained in …

Explained | RBI’s concerns on slow deposit growth
2 years, 1 month ago

Explained | RBI’s concerns on slow deposit growth

The Hindu  

The story so far: The Governor, Deputy Governor and a few other senior officials of apex banking regulator, the Reserve Bank of India, met MD and CEOs of public and certain private sector banks on November 16. Acknowledging the role played by private commercial banks in supporting economic growth during the pandemic and in the ongoing financial market turmoil, the …

RBI concerned about slow deposit growth
2 years, 1 month ago

RBI concerned about slow deposit growth

Deccan Chronicle  

Mumbai: The Reserve Bank Of India is concerned about the slow deposit growth and how banks would support double-digit credit growth amidst tightening liquidity. The issue was discussed on Wednesday when RBI governor Shaktikanta Das met managing directors and chief executive officers of public sector banks and key private sector banks. One of the issues discussed was that while credit …

Liquidity Crunch Is Real. How Scheduled Commercial Banks Are Coping As Credit Growth Outpaces Deposit Growth
2 years, 2 months ago

Liquidity Crunch Is Real. How Scheduled Commercial Banks Are Coping As Credit Growth Outpaces Deposit Growth

ABP News  

A video is doing the rounds of social media, showing an official of Canara Bank, a Public Sector Bank, selling fixed deposits like a hawker in the streets of Mumbai suburbs in order to build up bank deposits. Both Canara Bank and HDFC Bank are actually on the ball as the slow deposit growth against the double-digit growth is creating …

Tightening liquidity may force Indian banks to compete harder for deposits
2 years, 3 months ago

Tightening liquidity may force Indian banks to compete harder for deposits

Live Mint  

Indian banks may be forced to compete harder to boost deposits amid tightening liquidity and rising credit demand ahead of the festive season, analysts warned. With excess liquidity in the banking system over the last couple of years on account of the cash infused by the RBI during the pandemic, banks chose to rely on raising funds from money markets …

Credit demand is gathering momentum; Will deposits catch up with the pace?
2 years, 4 months ago

Credit demand is gathering momentum; Will deposits catch up with the pace?

Live Mint  

As the impact of the pandemic continues to fade away, credit offtake in the financial system has been gathering momentum. According to the CMIE report, outstanding personal loans increased by 1.5 per cent in June 2022 compared to the previous month. Credit growth in the large industries segment was 3.3 per cent, compared to a 4.8 per cent contraction in …

India's GDP growth turns positive, but experts caution against celebrating 0.4% growth
3 years, 10 months ago

India's GDP growth turns positive, but experts caution against celebrating 0.4% growth

India Today  

Though India’s economic health continues to slowly improve, a comprehensive recovery is yet to be seen. It had contracted by 23.9 per cent in April-June 2020 and by 7.5 per cent in July-September 2020; in the October-December 2020 period, it grew 0.4 per cent. The Finance Ministry’s Economic Survey 2020-21 projects that India’s real GDP growth in FY22 will be …

Bank Credit Rises 5.67%, Deposits Up 10.63%, RBI Data Shows
4 years, 1 month ago

Bank Credit Rises 5.67%, Deposits Up 10.63%, RBI Data Shows

News 18  

Bank credit grew by 5.67 per cent to Rs 104.04 lakh crore, while deposits increased by 10.63 per cent to Rs 143.80 lakh crore in the fortnight ended November 6, according to RBI data. In the previous fortnight ended October 23, 2020, bank credit had risen by 5.06 per cent and deposits by 10.12 per cent. On a year-on-year basis, …

Bank Credit Grows 5.52% in Fortnight Ended Aug 14: RBI Data
4 years, 4 months ago

Bank Credit Grows 5.52% in Fortnight Ended Aug 14: RBI Data

News 18  

Bank credit grew 5.52 per cent to Rs 102.19 lakh crore and deposits increased 11.04 per cent to Rs 140.80 lakh crore in the fortnight ended August 14, according to RBI data. In the previous fortnight ended July 31, 2020, bank credit grew 5.51 per cent while deposits witnessed a growth of 11.11 per cent. On a year-on-year basis, non-food …

Bank credit growth slows to 10.24%, deposits at 9.73%
5 years, 3 months ago

Bank credit growth slows to 10.24%, deposits at 9.73%

India TV News  

Bank credit and deposits growth slowed to 10.24 percent and 9.73 percent to Rs 96.80 lakh crore and Rs 127.80 lakh crore, respectively, in the fortnight to August 30, show the latest RBI data. In the previous fortnight to August 16, advances grew 11.64 percent to Rs 96.82 lakh crore and deposits by 10.15 percent to Rs 126.80 lakh crore. …

The case for doubting India’s GDP numbers
5 years, 6 months ago

The case for doubting India’s GDP numbers

Live Mint  

Arvind Subramanian was the chief economic advisor to the Government of India from October 2014 to June 2018. Arvind Subramanian wrote an article in The Indian Express summarizing his findings on the econometric work he had done on India’s gross domestic product growth estimates. I concluded—without any statistical estimation—that India’s real GDP growth rate might be overstated by 1-1.5 percentage …

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