As on September 6, the gap had shrunk to just over 200 basis points (bps), down from more than 700 bps at the start of 2024. Loan growth in banks had moderated to 13.3 per cent, while deposit growth had climbed to over 11 per cent.
"In the credit market, with deposit mobilisation becoming a challenge, banks continue to rely heavily on certificates of deposit to meet funding needs so that lagging deposit growth does not constrain credit," stated the report, which is part of the monthly RBI Bulletin.
It further observed that banks are offering higher interest rates on deposits, with more than two-thirds of term deposits now earning 7 per cent or more. "The gap between credit and deposit growth is, however, beginning to narrow," stated the report, which has been authored by RBI staffers but does not represent the banking regulator's views.
During the August review of the monetary policy, RBI Governor Shaktikanta Das cautioned banks against relying too heavily on short-term nonretail deposits and other liability instruments to meet the incremental credit demand.
This story is from the September 21, 2024 edition of Business Standard.
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This story is from the September 21, 2024 edition of Business Standard.
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