Credit-Deposit Ratio Rises, but Still

Hovers Just Below 80%

May 07, 2024 l BFSI Research

Synopsis
• Credit offtake continued to grow, increasing by 19.0% year-on-year (y-o-y) to reach Rs. 164.9 lakh crore, for
the fortnight ending April 19, 2024. This rise can continue to be attributed to the impact of HDFC’s merger
with HDFC Bank along with the growth in personal loans. If we exclude the impact of the merger, credit grew
at 15.3% y-o-y for the fortnight compared to last year’s growth of 15.9%. Sequentially credit declined by
0.6%. Meanwhile, the outlook for bank credit offtake continues to remain positive.
• Deposits too grew by 13.8% y-o-y for the fortnight (including the merger impact) and reached Rs. 207.5 lakh
crore as on April 19, 2024, driven by growth in demand deposits. Excluding the merger impact, growth stood
at 10.2%. Sequentially deposits declined by 1.2%. Deposit growth is expected to improve compared to earlier
periods as banks shore up their liability franchise and ensure that deposit growth does not constrain credit
offtake.
• The Short-term Weighted Average Call Rate (WACR) stood at 6.65% as of April 26, 2024, compared to 6.70%
on April 28, 2023, as rates are moving closer towards repo rate.

Bank Credit Growth Continues to Remain Elevated

Figure 1: Bank Credit Growth Trend (y-o-y %, Rs. Lakh crore)

200.0 Bank Credit Bank Credit Growth 25%

164.3 166.0 164.9
143.9 151.5 159.6
133.0 136.8 20%
150.0
118.9 123.8 126.3
108.5 107.4 108.5 115.8 20.0% 20.0% 20.2% 19.9% 19.0%
15%
100.0 16.4% 16.2%
14.5% 14.9% 15.0% 10%
50.0 9.3% 9.6% 5%
5.6% 5.8% 6.7%
0.0 0%
Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jul-22 Sep-22 Dec-22 Mar-23 June - Sep - Dec - Mar - Apr 5, Apr 19,
23 23 23 24 2024 2024

Note: Bank credit growth and related variations for all fortnights since December 3, 2021, are adjusted for past reporting errors
by select scheduled commercial banks (SCBs). The quarter-end data reflect, the last fortnight’s data of that particular quarter;
Source: RBI, CareEdge

• Credit offtake increased by 19.0% y-o-y and declined 0.6% sequentially for the fortnight ended April 19,
2024. It is important to note that the y-o-y figures are not directly comparable, as the data reported by the
RBI as of April 19, 2024, includes the impact of the merger of HDFC with HDFC Bank. In absolute terms,
over the last twelve months, credit offtake expanded by Rs. 26.4 lakh crore to reach Rs. 164.9 lakh crore as
of April 19, 2024. Excluding the impact of the merger, the growth stood at 15.3% y-o-y for the fortnight,
which is below last year’s growth rate of 15.9%. This growth continues to be primarily driven by continued
demand for personal loans. Bank credit growth maintained high growth and outpaced deposit growth

1
 Credit-Deposit Ratio Rises, but Still Hovers Just Below 80%

significantly in FY24. The personal loans segment has remained the largest segment, while the industrial
sector reported muted growth.
• The medium-term prospects look promising with sustained personal loans along with the anticipated increase
in capex spending, especially in the private sector. Additionally, CareEdge estimates the credit growth to be
in the range of 14%-14.5% during FY25. However, elevated interest rates and global uncertainties could
adversely impact credit growth. Further ebbing inflation could also reduce the working capital demand. The
effect of the HDFC merger would dissipate by the end of Q1FY25. However, elevated interest rates and
global uncertainties could adversely impact credit growth.

Figure 2: Bank Deposit Growth Continues to Rise (y-o-y %)

210 191.6 192.8 200.8 204.8 210.0 207.5 15%
177.3 180.4
180 162.4 164.7 169.6 170.3
151.1 153.0 156.0 13.5% 13.8% 13.3% 12%
150 13.0% 13.2% 13.2%
11.4%
120 10.3% 10.3% 9%
9.8%
9.3% 8.9% 9.2% 9.2% 9.6%
90
6%
60
30 3%
Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jul-22 Sep-22 Dec-22 Mar-23 June - Sep - Dec - Mar - Apr 5, Apr 19,
23 23 23 24 2024 2024
Bank Deposit (Rs lakh crore) Bank Deposits growth %
Note: The quarter-end data reflect, the last fortnight’s data of that particular quarter; Source: RBI, CareEdge

• Deposits rose at 13.3% y-o-y for the fortnight (reported April 19, 2024), and sequentially saw a decline of
1.2% as numbers normalized from a robust fortnight’s performance. Without considering the merger, growth
was 12.7%. Meanwhile, in absolute terms, deposits expanded by Rs. 24.6 lakh crore over the last 12 months
and reached Rs. 207.5 lakh crore as of April 19, 2024.
• Deposit growth although improving has lagged credit growth for FY24 and is anticipated to play a leading
role in FY25 as banks take additional efforts to shore up their liability franchise and ensure that lagging
deposit growth does not constrain the credit offtake. Further with rate cuts anticipated in the later part of
FY25, some amounts might flow back into the banking system thereby improving the CASA ratios to a certain
extent. Hence, based on GDP forecasts and management expectations, CareEdge estimates the deposit
growth to be in the range of 13%-13.5% during FY25.

Figure 3: Credit-Deposit (CD) Ratio Hovers just below 80% – Includes Merger Impact
85%
80.3%
78.6% 79.5% 79.1% 79.5%
80%
75.8% 75.1%
74.2% 75.0%
73.0%
75%
71.8% 70.9% 71.3% 72.2%
69.6%
70%

65%
Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jul-22 Sep-22 Dec-22 Mar-23 June - Sep -23 Dec -23 Mar -24 Apr 5, Apr 19,
23 2024 2024

2
 Credit-Deposit Ratio Rises, but Still Hovers Just Below 80%

Note: The quarter-end data reflect last fortnight’s data the quarter, and compares post-merger figures; Source: RBI, CareEdge

• The CD ratio has been generally hovering around 80% since September 2023. The CD ratio saw an uptick
of 43 bps, compared to the previous fortnight, and stood at 79.5% for the fortnight (April 19, 2024). The
HDFC merger mainly drives this growth. If we exclude the merger impact, the CD ratio for the current
fortnight stood at 77.4% compared to 75.7% on April 21, 2023.

Figure 4: Trend in Credit and Deposit Movement (y-o-y,)

Apr 23, 2021 Apr 22, 2022 Apr 21, 2023 Apr 19, 2024
Credit 5.2% 9.6% 15.7% 19.9%
Deposit 11.2% 10.6% 10.2% 13.8%
Source: RBI, CareEdge, compares post-merger figures

Deposit growth has seen relatively steady performance since Covid times. However, in recent periods, credit growth
has been significantly outperforming deposit growth. Meanwhile as can be observed below, in absolute terms in
recent times, deposits have witnessed higher inflows compared to the credit offtake.

Figure 5: Trend in Credit and Deposit Movement (Rs In lakh crores)

Last 12 Months Last Six Months Last Month Last Fortnight
Credit 26.4 9.3 0.6 1.1
Deposit 24.4 10.4 2.7 2.5
Source: RBI, CareEdge, compares post-merger figures

Proportion of Credit to Total Assets Drops, while Govt. Investment to Total Assets Increases
Figure 6: Proportion of Govt. Investment and Bank Credit to Total Assets (%)
100

80 66.8 65.6 65.5 66.8 67.4 66.8 66.9 67.7 67.3 67.4 67.3 67.2 68.4 68.8 68.6

60

40 27.5 28.0 28.2 26.6 26.8 26.7 26.9 25.9 26.7 26.5 26.5 26.5 25.3 25.4 25.6
20

0
Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jul-22 Sep-22 Dec-22 Mar-23 Apr-23 Jun-23 Sep-23 Dec-23 Apr 5, Apr 19,
Bank Credit as % of total assets Govt. Investment as % of total assets 2024 2024
Note: The quarter-end data reflect the last fortnight’s data of that particular quarter; 2) Total assets = Cash in hand + Assets
with the Banking System + Investments + Bank Credit; Source: RBI, CareEdge

• The credit to total assets ratio witnessed a downtick of approx. 18 bps compared to the previous fortnight
and stood at 68.6% for the fortnight (April 19, 2024). Government Investment to Total Assets Ratio rose by
20 bps and stood ats 25.6%. Meanwhile, overall government investments stood at Rs 61.4 lakh crore as of
April 19, 2024, reporting a growth of 12.9% y-o-y, and 0.3% sequentially.

3
Credit-Deposit Ratio Rises, but Still Hovers Just Below 80%

O/s CDs and CPs Continue to Remain at Elevated Levels

Figure 7: Certificate of Deposit Outstanding Figure 8: Trend in CD Iss. (Rs’000, Cr.) and RoI
Amount Y-o-Y CD Issuance RoI Low (%) RoI High (%) 9%
Fortnight 80
Outstanding growth
ended 8%
(Rs’000 cr.) % 70
May 20, 2022 193.0 113.7 60 7%
July 01, 2022 223.8 222.9 6%
50
Sep 23, 2022 252.2 318.7 5%
40
Dec 30, 2022 294.0 247.1 4%
30
Jan 27, 2023 279.8 180.6 3%
Feb 10, 2023 269.7 139.6 20 2%
Feb 24, 2023 280.4 120.4 10 1%
Mar 24, 2023 304.5 50.4 0 0%

2022
2022

2022

2023

2023
2023

2023

2024
2022

2023
2023

2024
2023

2024
2022

2023
2022

2023

2023
2022

2022

2023

2023

2024
Apr 07, 2023 301.4 49.6
Nov 17, 2023 314.5 22.1 Jul 29,
Aug 28,

Mar 26,

Jul 24,
Aug 23,

Mar 20,
May 30,

Apr 25,
May 25,

Apr 19,
Jan 25,

Jan 20,
Sep 27,

Sep 22,
Oct 27,

Feb 24,

Oct 22,
Jun 29,

Nov 26,
Dec 26,

Jun 24,

Nov 21,
Dec 21,

Feb 19,
Feb 9, 2024 355.3 27.0
Apr 19, 2024 372.8 24.1
Note: The quarter-end data reflect the last fortnight’s
data of that particular quarter; Source: RBI

Figure 9: Commercial Paper Outstanding Figure 10: Trend in CP Iss. (Rs’000, Cr.) and RoI
100 18%
Amount CP Issuance RoI Low (%) RoI High (%)
Fortnight Y-o-Y
Outstanding 90 16%
ended growth %
(Rs’000 cr.) 80 14%
May 15, 2022 384.4 -5.0 70
12%
Jun 30, 2022 372.5 -1.0 60
10%
Aug 31, 2022 410.0 4.7
50
Oct 31, 2022 373.3 -1.6 8%
40
Dec 15, 2022 363.7 -18.6
6%
30
Jan 31, 2023 363.9 -8.1
20 4%
Mar 15, 2023 371.3 0.9
Apr 30, 2023 421.7 15.5 10 2%

May 31, 2023 433.5 12.7 0 0%

Mar 7, 2023

Jul 5, 2023

Jan 31, 2024

Mar 1, 2024
Oct 8, 2022

Oct 3, 2023

Apr 30, 2024

Jun 10, 2022
Jul 10, 2022

Feb 5, 2023

May 6, 2023

Mar 31, 2024

Aug 9, 2022

Nov 7, 2022

Jan 6, 2023

Apr 6, 2023

Aug 4, 2023

Nov 2, 2023

Jan 1, 2024
Sep 8, 2022

Dec 7, 2022

Jun 5, 2023

Sep 3, 2023

Dec 2, 2023

Jun 30, 2023 433.2 16.3

Sep 30, 2023 412.2 2.8
Feb 15, 2024 395.3 7.1
Apr 30, 2024 411.5 -2.4
Note: The quarter-end data reflect the last fortnight’s
data of that particular quarter; Source: RBI

4
 Credit-Deposit Ratio Rises, but Still Hovers Just Below 80%

RBI Announcements
• Announcement • Details
• Prudential • The Reserve Bank of India has, over the past few years, taken concerted
Framework for measures for putting in place a principle-based regime for resolution of stressed
Income assets. The Prudential Framework for Resolution of Stressed Assets issued on
Recognition, June 7, 2019 (‘Prudential Framework’) provides a comprehensive framework
Asset for early recognition and resolution of stress in borrower account. However,
Classification restructuring of exposures relating to projects under implementation on
and Provisioning account of change in date of commencement of commercial operations (DCCO)
pertaining to was excluded from the ambit of the Prudential Framework, pending further
Advances - review.
Projects Under • Based on a comprehensive review of the regulatory norms and the taking into
Implementation, account the experience of banks with regard to financing of project loans, it
Directions, 2024 has been decided to rationalise the extant guidelines and harmonise the same
for all regulated entities (REs) which undertake project finance.
• The revised prudential norms, as consolidated in this Master Direction, are
being issued by the Reserve Bank in exercise of the powers conferred by the
Banking Regulation Act, 1949; the Reserve Bank of India Act, 1934; the
National Housing Bank Act, 1987; and the Factoring Regulation Act, 2011.

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Credit-Deposit Ratio Rises, but Still Hovers Just Below 80%

Contact
Sanjay Agarwal Senior Director [email protected] +91 - 22 - 6754 3582 / +91-81080 07676
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Tejas Poojary Lead Analyst – BFSI Research [email protected] +91 - 22 - 6754 3629 / +91-97699 93903
Mradul Mishra Media Relations [email protected] +91 - 22 - 6754 3596

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