Bank deposits grew by 10.3% while credit expanded at a slightly higher rate of 11% in the fortnight ending March 21, 2025, according to data released by the Reserve Bank of India. The gap between credit and deposit growth continues to keep the credit-to-deposit ratio above 80%, reflecting liquidity constraints and relatively slower deposit accumulation.
As of March 21, outstanding deposits stood at Rs 225.7 lakh crore, compared to Rs 204.7 lakh crore in the same period last year. Bank credit increased to Rs 182.4 lakh crore from Rs 164.3 lakh crore a year ago.
In response to these trends, banks have intensified efforts in FY25 to build stronger liability franchises. This includes offering higher interest rates on term deposits and tapping into higher-cost funding options like certificates of deposit. The issuance of certificates of deposit surged by 34% year-on-year, reaching an all-time high of Rs 10.58 lakh crore during the financial year 2024–25 up to March 7. Commercial paper issuances also rose by 13.5% year-on-year, totaling Rs 13.90 lakh crore as of February 28, 2025.
The consistently high credit-to-deposit ratio reflects both strong credit demand and the challenges banks face in mobilizing deposits under tightened liquidity conditions, according to a report by CareEdge Ratings.
