Deposits match credit tempo

Aggregate deposits in eight months of FY06 surge Rs 2,93,483 crore

The year-on-year growth in banks' deposits has finally caught up with the increase in credit.

This should come as a welcome relief for bankers struggling to ensure they have adequate resources to fund credit growth, particularly retail loans.

Aggregate deposits in the first eight months of 2005-06 increased by Rs 2,93,483 crore year-on-year as against a rise of Rs 2,93,643 crore in credit during the period.

The year-on-year increase in deposits in percentage terms was less than half of credit growth since January 2005. The gap started narrowing in September. By the end of October 2005, credit growth was just Rs 160 crore more than the accretion to deposits.
 

ON THE RISE The incremental aggregate deposit and credit base in 2005
Month (Rs cr)	Aggregate  deposits	Total credit
April	2,32,413	2,62,531
May	2,28,971	2,80,054
June	2,27,944	2,82,517
July	2,44,900	2,94,715
August	2,51,372	2,93,275
September	3,01,913	3,17,146
October	2,93,483	2,93,643
Source: Reserve bank of India's Weekly Statistical Suppliments

The gap declined from Rs 50,215 crore as during end-July to Rs 41,903 crore in August and further to Rs 15,233 crore in September.

The credit-deposit ratio has increased to 65.8 per cent from 58.4 per cent a year ago. The CD ratio had gone past 60 per cent earlier this year for the first time.

The incremental non-food credit-deposit ratio has declined to 75.2 per cent from 92.9 per cent a year ago.

Many banks have funded credit growth by liquidating their excess statutory liquidity ratio (SLR) investments. For some banks, the SLR ratio is now just above the regulatory requirement of 25 per cent of deposits.

For the banking industry as a whole, the SLR portfolio is above 35 per cent.