The deposit growth is likely to improve as banks look to shore up their liability franchise and meet the demand for credit, CareEdge Ratings said in a report.
Deposits grew 13.2% year-on-year (y-o-y) to nearly Rs 201 trillion for the fortnight ended January 26 including the impact of the merger of Housing Development Finance Corporation with HDFC Bank, the latest data from the Reserve Bank of India (RBI) showed.
Excluding the impact of the merger, deposits rose 12.6% YoY. The short-term weighted average call rate rose to 6.72% as of February 2, compared with 6.28% on February 3, 2023, due to liquidity and pressure on short-term rates.
Credit offtake rose 20.3% YoY to Rs 160.4 trillion for the fortnight ended January 26, aided by economic expansion and a push for retail credit. Excluding the impact of the merger, the growth stood at 16.1% YoY for the fortnight, below last year’s growth rate of 16.3%.
The credit-to-deposit (CD) ratio remained at a three-year high of 80% for the fortnight ended January 26, largely driven by the impact of the merger. Excluding the impact of the merger, the CD ratio stood at 77.7% as on January 26.
“While deposits have seen relatively steady performance since COVID, the credit growth has significantly outperformed in recent years. This can be attributed to a comparatively lower base in credit as well as an increase in demand,” CareEdge said.