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BankingNABARD / RBI

Banks Lean on Certificates of Deposit as Deposits Lag

11 December 20251 min read
BANKING & FINANCEBanks Lean onCertificates ofDeposit asDeposits Lag11 December 2025safalsetu.com

Why in the news

Deposits are growing slower than loans, so banks turned to certificates of deposit (CDs), a trend expected to continue.

Key facts

  • Cause: tight liquidity.
  • Credit pickup expected in H2 FY26.
Fortnight ended 14 Nov 2025Growth
Credit11.4%
Deposits10.2%
Gap120 bps

About CDs

  • A negotiable fixed-income security paying a fixed rate for a set period.
  • Alternative to bulk term deposits; replaces maturing deposits; aids liquidity management.

Drivers

  • Weak retail deposit inflows after rate cuts; need to keep the LCR.
  • Cumulative 125 bps RBI cuts; banks avoid deep deposit-rate cuts to protect margins.
  • GST and income tax relief supporting credit demand.

Exam angle

  • CD: negotiable instrument. LCR: Liquidity Coverage Ratio.

Test yourself

1. How much did banks raise through certificates of deposit in the fortnight ended 28 November 2025?

The notes say banks raised nearly ₹78,000 crore.

2. A certificate of deposit is best described as which type of instrument?

A CD is a negotiable, fixed-income security issued by banks.

3. What was the gap between credit growth and deposit growth in the notes on bank CD borrowing?

Credit grew 11.4% and deposits 10.2%, a 120 bps gap.

This topic is part of Daily Current Affairs 11 December 2025 (18 topics).

All topics of the dayDay quizDecember 2025

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