Banks seem to be reaping the benefit of volatile equity markets and high gold prices.

Deposits, mainly fixed deposits, have soared by Rs 3,25,514 crore in the April-June period this fiscal, against Rs 2,83,979 crore in the corresponding year-ago period.

“Given that equity markets are volatile and gold has become dear, investors are looking for a safe haven to invest. So, banks are the best option when it comes to safety of investment,” said a senior public sector bank official.

Further, thanks to the liberalisation in interest rates, Non-Resident Indian (NRI) deposits have become attractive.

As per Reserve Bank of India data, NRI deposits increased by $791 million in the first two months of 2012-13.

Deposits have also increased as investors are locking up their surplus funds at higher yields for longer periods as interest rates are expected to soften during the course of the year.


In the April-June period, the credit off-take was more-or-less at par with what obtained in the year-ago period.

As per RBI’s scheduled banks’ statement of position, in the reporting period, bank credit rose by Rs 1,49,271 crore (Rs 1,47,667 crore in the year-ago period).

“There is hardly any demand for fresh investment credit. Working capital credit demand, however, is holding up. Projects which are already under implementation are drawing funds,” said another banker.

As far as credit goes, the first two quarters are typically slack for Indian banks.

C-D ratio

With deposit accretion outpacing credit growth, the collective incremental credit-deposit ratio of banks has gone down to 46 per cent from 52 per cent in the year-ago period.

C-D ratio indicates how much loans banks have made out of the deposits raised by them. In the Indian scenario, a C-D ratio of 70 per cent is considered as ideal.


With credit offtake being lacklustre, banks deployed the funds raised via deposits in Central and State government securities.

Banks’ investments in these securities aggregated to Rs 1,26,277 crore (Rs 1,03,055 crore).

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