With the loan growth in the system continuing to outstrip the deposit accumulation, the loan-to-deposit ratio in the fortnight ended February 22 moved to an all-time high of 78.1 per cent from 77.6 per cent in the previous fortnight.
Deposits have risen at a slow pace for over a year now, even as loan growth has tapered off averaging at 16 per cent y-o-y. In the fortnight to February 22, deposits grew at 12.73 per cent y-o-y to Rs 65,61,051 crore, whereas towards the end of 2011, the growth was averaging at 18 per cent.
On a year-to-date (YTD) basis, loans and deposits grew 9 per cent and 7.3 per cent, respectively.
A Morgan Stanley report notes the trailing 12 month incremental credit deposit ratio moved higher to 96.7 per cent against 93.6 per cent in the previous fortnight. The report adds the deposit base has contracted by $1.8 billion (-0.1 per cent) in the fortnight against an increase of $8 billion (0.7 per cent) in the last fortnight. On other hand, the outstanding loans rose by $4.7 billion (0.5 per cent) against an increase of $8.9 billion (1.0 per cent) in previous fortnight.
Deposit accretion has slowed as inflation-adjusted returns are not attractive. In all this, it?s really the cheaper current and savings accounts (Casa) that are fast vanishing as seen from the drop in the ratio of demand to time deposits that has been falling for over a year now.
While time deposits continue to clock a reasonably good 14.5 per cent, the increase in demand deposits has been very subdued at 2-2.5 per cent. That?s understandable since corporates are managing their funds more carefully given a dull business and individuals are compelled to hold on to more cash at a time when consumer inflation is running at 10 per cent.