Ahead of festive season, lenders have a new worry of sub-9% deposit growth

Credit to industry has also expanded 9.5 per cent during this period

The gap between credit growth and deposit growth is widening. There are growing concerns that sub-9 per cent growth in deposit may pose funding challenges to lenders as they enter the festival season that sees high credit demand.

However, experts believe that the banking system liquidity is still comfortable since banks are parking over Rs 3 trillion in the standing deposit facility (SDF) and the reverse repo window of the Reserve Bank of India (RBI).

As liquidity in the system gets eroded to support high credit demand, banks may soon have to start chasing deposits aggressively, which, in turn, will