With runaway loan growth, banks have been somewhat short on deposits this past year. On average, credit has been clocking a growth of 15-16%, led by personal loans and loans to shadow lenders, whereas deposits have been growing at about 12-13%. Most banks have been wooing savers by raising the interest rate on deposits, but credit deposit ratios (CDR) are hitting new highs.In the December 2023 quarter, for instance, HDFC Bank reported a sharp 62% y-o-y increase in advances, while deposits went up by just 28% y-o-y. Moreover, with savers parking more money in term deposits, lenders are losing cheaper current account and savings accounts (CASA).
At Union Bank of India, the CASA ratio moderated to 34.4%in Q3FY24 from 34.66% in Q2FY24 and 35.35% a year ago. Nidhu Saxena, ED at Union Bank, said there was much competition for CASA. “There is a move from CASA to fixed deposits and money has moved from bank deposits to stocks,” he said.As Sandeep Batra, ED, ICICI Bank, said, the lower CASA growth is a trend across banks. “We would have to wait and see how CASA plays out over next year as we expect easing of monetary policy,” Batra said.
Meanwhile, lenders are working to grow their retail deposit franchises. S Vaidyanathan, CFO, HDFC Bank, said the lender has been able to get nearly 65% of the bank’s new mortgage loan customers to open a CASA account. “At least one-two months of EMIs are being paid by customers through the new CASA account balances,” he said.Union Bank’s Saxena said the bank has identified its salaried customer base to grow the low-cost CASA book. The lender is employing agents to engage with existing and new clients who can mobilise salaried individuals’ deposits.
Consultants are being hired to persuade customers to keep higher balances with the bank. Vaidyanathan said his bank has opened 908 branches in the last 12 months and will add nearly 1,000 branches each year to expand reach in the hinterland to attract CASA. Over the next three to five years, the lender aims to expand its branch network from around 8,091 to over 13,000 branches, he said. RBL Bank MD & CEO R Subramaniakumar said the lender is focused on granularising the deposit base with less than Rs 2 crore deposit accounts.
“We have around 538 branches which are all liability sourcing points, plus we have another 800 business correspondent branches of our subsidiary, which hitherto we were not leveraging. We will leverage these 800 touch points also,” he said. A total of 1,300 touch points will facilitate deposit mobilisation, which will be retail in nature.