They were in a conversation with Tamal Bandopadhyay, Consulting Editor, Business Standard.
Indian banks have been struggling to mobilise enough deposits to support the credit growth in the system. As a result, the credit growth in the system outpaced deposit growth for nearly 30 months after finally aligning with each other in the fortnight ended October 18.
However, the alignment in deposit growth with credit expansion can largely be attributed to a decline in credit growth from its previous highs.
According to the latest data from the Reserve Bank of India (RBI), deposits in banks grew 11.74 per cent year-on-year (Y-o-Y) during the fortnight ended October 18 to ₹218.07 trillion.
Credit growth, during the same period, came in at 11.52 per cent Y-o-Y to ₹172.38 trillion. Credit growth exceeded deposit growth since the fortnight ended March 25, 2022, leading to a widening gap that reached as much as 700 basis points (bps).
The challenge of deposit mobilisation for banks was intensified by the upward trend in equity markets, which has attracted more household savings than lenders. After Covid, households have increasingly shifted their investment to equities, directly as well as through mutual funds (MFs), at the expense of banks.
This story is from the November 07, 2024 edition of Business Standard.
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This story is from the November 07, 2024 edition of Business Standard.
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