Due Diligence
Indian banks may need to lift deposit rates as credit demand surges - RBI report
Reuters - 27 Dec, 2022
India's banking sector remained resilient in 2021/22 and lenders may have to raise deposit rates more to meet a surge in credit demand, the central bank said in a report on Tuesday.
The Reserve Bank of India (RBI) has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the hikes to their lending rates, deposit rates have been laggards for most.
"During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high," the RBI said in its report on Trends and Progress of Banking released on Tuesday.
REUTERS/Francis Mascarenhas
MUMBAI, Dec 27 (Reuters) - India's banking sector remained resilient in 2021/22 and lenders may have to raise deposit rates more to meet a surge in credit demand, the central bank said in a report on Tuesday.
The Reserve Bank of India (RBI) has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the hikes to their lending rates, deposit rates have been laggards for most.
"During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high," the RBI said in its report on Trends and Progress of Banking released on Tuesday.
Loans of Indian banks rose 17.5% in the two weeks to Dec. 2 from a year earlier, while deposits rose 9.9%, the latest data from the RBI showed earlier in the month.
The consolidated balance sheet of Indian banks notched double-digit growth in 2021/22 after a gap of seven years, with credit growth accelerating to a ten-year high at the end of the first half of fiscal 2023, the report added.
The surge in credit growth was largely led by private sector lenders.
India's banking sector remained resilient in 2021/22 and lenders may have to raise deposit rates more to meet a surge in credit demand, the central bank said in a report on Tuesday.
The Reserve Bank of India (RBI) has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the hikes to their lending rates, deposit rates have been laggards for most.
"During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high," the RBI said in its report on Trends and Progress of Banking released on Tuesday.
REUTERS/Francis Mascarenhas
MUMBAI, Dec 27 (Reuters) - India's banking sector remained resilient in 2021/22 and lenders may have to raise deposit rates more to meet a surge in credit demand, the central bank said in a report on Tuesday.
The Reserve Bank of India (RBI) has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the hikes to their lending rates, deposit rates have been laggards for most.
"During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high," the RBI said in its report on Trends and Progress of Banking released on Tuesday.
Loans of Indian banks rose 17.5% in the two weeks to Dec. 2 from a year earlier, while deposits rose 9.9%, the latest data from the RBI showed earlier in the month.
The consolidated balance sheet of Indian banks notched double-digit growth in 2021/22 after a gap of seven years, with credit growth accelerating to a ten-year high at the end of the first half of fiscal 2023, the report added.
The surge in credit growth was largely led by private sector lenders.