Banking sector update: Deposit growth surpasses credit growth for first time since April 2022

The Indian banking sector has witnessed a shift in business momentum. For the first time since April 8, 2022, deposit growth has outpaced credit growth, as of October 18, 2024.

This marks a trend change that could impact future lending and financial strategies.

Key highlights

• Year-to-date (YTD), the deposit growth rate has consistently surpassed credit growth. Deposits increased by 6.5% compared to last year, while overall credit growth stands at 4.9%.
• Money supply (M3) growth reached 11.06% year-on-year (YOY), the highest in 12 fortnights.
• Credit growth is currently at 11.52% YOY, the lowest it has been in 62 fortnights.

Detailed statistics ( This data excludes the addition of HDFC Ltd figures following its merger with HDFC Bank)

• Current deposits are approximately ₹217.3 lakh crore, reflecting a 12.16% YOY increase but a slight decline of 0.5% from the previous fortnight.
• Advances stand at ₹167.7 lakh crore, marking a 13.03% YOY increase, although down 0.34% on a fortnightly basis.
• The credit-deposit (CD) ratio has slightly risen to 77.17% from 77.04% two weeks ago.

Weekly insights

• Weekly deposits decreased by 0.51%.
• Demand deposits fell by 1.81%, likely influenced by seasonal spending patterns ahead of Diwali.
• Time deposits saw a modest decline of 0.34%.
• Food credit increased by 4.8%, while non-food credit dipped by 0.35%, leading to an overall credit decline of 0.34%.

Year-on-year analysis

• Total deposits reached ₹218.1 lakh crore, up 11.8% YoY.
• Advances rose to ₹172.4 lakh crore, up 11.5% YoY.
• Food credit saw a decrease of 6%, while non-food credit increased by 11.54%.

Conclusion

The recent data signals a shift in banking dynamics. With deposits growing faster than loans for the first time in over two years, banks may need to adjust their strategies.