Credit and deposit growth continue to cool down, but their growth rates were aligned for the fortnight ending November 29, 2024, according to CareEdge Ratings.

Additionally, when comparing growth rates with December 2023, credit offtake has slightly outpaced deposit growth.

The credit rating agency noted that on year-on-year (y-o-y) basis, credit saw a growth of 10.6 per cent, slower than last year’s rate of 20.6 per cent (including merger impact). As on November 29, 2024, scheduled commercial banks’ outstanding credit stood at ₹175.1 lakh crore.

Meanwhile, deposits witnessed a 10.7 per cent y-o-y growth, compared to 13.6 per cent last year. The agency’s assessment suggests this can be attributed to a higher base effect due to merger and RBI measures such as higher risk weights and proposed LCR (liquidity coverage ratio) norms.

As on November 29, 2024, scheduled commercial banks’ outstanding deposits stood at ₹220.2 lakh crore. This growth can be attributed to elevated term deposit rates of Scheduled Commercial Banks (SCBs), said CareEdge Rating’s Senior Director Sanjay Agarwal, Associate Director Saurabh Bhalerao and Analyst Sarthak Hirekhan in a report.

“In absolute terms, over the last 11 months, credit offtake expanded by ₹15.4 lakh crore, reaching ₹175.1 lakh crore as of November 29, 2024. The slowdown compared to previous year can be attributed to a higher base effect, commentary on the lowering of a high credit-todeposit ratio, RBI measures such as higher risk weights, and the proposed LCR norms,” the rating agency officials said.

Meanwhile, in absolute terms, deposits have expanded by₹19.4 lakh crore over the last 11 months.

Deposits have remained prominent in FY25 as banks have intensified efforts to strengthen their liability franchise and have offered higher term deposit rates, said Agarwal, Bhalerao and Hirekhan. The banks also obtain funds through certificates of deposit, albeit at a comparatively higher expense.

Published on December 18, 2024