Bank Credit-Deposit Growth Gap Widens to 90 bps
Why in the news
Credit outpaced deposits in the fortnight to 7 March 2025, widening the gap as liquidity stayed tight and deposits were hard to mobilise.
Fortnight figures
| Item | Credit | Deposits |
|---|---|---|
| YoY growth | 11.1% | 10.2% |
| Rise in fortnight | ₹1.38 trillion | ₹2.25 trillion |
| Outstanding | ₹225.10 trillion | ₹181.28 trillion |
Key facts
- Gap between credit and deposit growth: about 90 bps.
- Net liquidity deficit: ₹2.32 trillion, the 14th week in a row.
- Large private banks are lowering their credit-deposit ratio and avoiding aggressive lending.
RBI steps
- Deferred changes to the LCR framework.
- Rolled back higher risk weights on NBFC exposures.
- Announced rationalised risk weights for microfinance loans.
- Future rate cuts could lower borrowing costs and lift credit.
Forecasts
- ICRA: FY25 credit growth raised from 10.8% to 11.5%; FY26 from 10.4% to 11.2%.
- CareEdge (Saurabh Bhalerao): FY25 credit about 11.2%, deposits about 10.5%; little room for aggressive lending.
Exam angle
- Liquidity deficit streak: 14 weeks.
- The gap may persist in the near term unless rate cuts and policy support help.