Bank deposit growth moderates to 11.8% in early October: RBI data

The pace of bank deposit mobilisation slowed down to 11.79 per cent year-on-year (Y-o-Y) as of October 4, 2024, from 13.6 per cent a year ago, according to Reserve Bank of India (RBI) data.

In absolute terms, banks raised Rs 23.12 trillion in the 12 months up to October 4, 2024, lower than Rs 23.43 trillion raised in the previous 12 months. RBI released the Scheduled Banks’ Statement of Position in India today. These figures factor in the merger of HDFC with HDFC Bank.

The tempo of credit offtake also slowed, with 12.77 per cent Y-o-Y growth, down from 19.3 per cent a year ago. In absolute terms, banks disbursed loans worth Rs 19.59 trillion in the 12 months up to October 4, 2024, much lower than Rs 24.93 trillion lent a year ago.

Banks have calibrated credit growth, keeping in mind the challenge of raising deposits as well as RBI’s concerns over the high pace of growth in the unsecured credit segment.

Meanwhile, rating agency Fitch today said the recent sharp rise in the loan-to-deposit ratio (LDR) could become a structural issue if low returns on deposits amid inflationary pressures—and evolving depositor preferences—hinder long-term deposit growth.

Factors such as inflationary pressures, increasing digitalisation, and strong capital market performance may further drive depositors to shift from bank deposits towards investments. This trend could render asset-liability management more challenging if banks’ long-term funding does not bridge the gap from any migrating deposits, it added.