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The incremental credit-deposit (C/D) ratio of all scheduled banks declined to 63.70 per cent in the first quarter (Q1) of FY24 against 100.32 per cent in the year-ago quarter on the back of deposit growth outstripping credit growth.
Banks’credit and deposits Q1FY24 grew by ₹7,16,738 crore ( ₹4,90,115 crore in Q1FY23) and ₹11,25,043 crore (₹4,88,541 crore), respectively, as per RBI’s latest “Scheduled Banks’ Statement of Position in India”.
The credit to deposit ratio indicates how much of each rupee of deposit a bank raises goes towards the credit markets.
The reporting quarter’s incremental CD ratio of 63.7 per cent implies that for every ₹100 fresh deposit mobilised by banks, they have extended fresh credit amounting to ₹63.70, with the balance ₹36.30 going into investments.
Also read: Banks, NBFCs’ provisional Q1 figures show robust credit, deposit growth
Banks are seeing robust deposit accretion as they are continuing to offer high interest rates even as there are inflows on account of withdrawal of ₹2,000 denomination bank notes.
Credit growth
CARE Ratings, in a recent report, observed that the credit growth continues to be driven by higher lending to non-banking finance companies, growth in personal loans, and agri and allied activities.
“The outlook for bank credit offtake continued to be positive due to the economic expansion, rise in capital expenditure, implementation of the PLI (production-linked incentive) scheme, and retail credit push. This growth would be coming off a high base in FY23 which would impinge marginally on the growth rate,”the agency said.
Also read: HDFC Bank-HDFC merger: What should you do with the stock of HDFC Bank now
CARE Ratings estimates the credit growth to be in the range of 13 per cent-13.5 per cent for FY24 excluding the impact of the merger of HDFC with HDFC Bank.
“If we include the merger, the growth is likely to be higher by around 3 per cent. The personal loan segment is expected to continue doing well compared with the industry and service segments in FY24,” per the agency.
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