SBI Report: Ideal Credit-Deposit Ratio for Banks
Why in the news
An SBI report warned that over-lending against deposits weakens profit and liquidity.
Optimum ranges
| Bank type | Optimum CD ratio | Risky above |
|---|---|---|
| Public sector and private banks | 76-80% | 80% |
| Foreign banks | 65-70% | 70% |
Above those levels, profit gains shrink and leverage-related risks rise.
About the CD ratio
- Share of deposits lent as credit: (Total Credit / Total Deposits) x 100.
- Tracked by the RBI; reflects financial deepening and liquidity, and flags regional credit imbalances.