As credit offtake moderates, the C/D ratio nudges downward.

In summary

credit growth is on the decline, and for the first time in the past 30 months, deposit growth has surpassed credit offtake on an annual basis. Furthermore, deposit growth has continued to surpass credit offtake when growth rates are compared to December 2023.

As of October 18, 2024, credit offtake had grown by 8.0% from December 2023 to Rs 172.4 lakh crores. The majority of this rise can be attributed to MSMEs and mortgages. However, a greater base effect brought on by the merger and RBI actions like higher risk weights and the planned LCR rules is responsible for the growth deceleration when compared to the previous year.

As of October 18, 2024, deposits have increased by 8.6% from December 2023 to Rs 218.1 lakh crore. Scheduled Commercial Banks’ (SCBs’) increasing term deposit rates are the cause of this expansion. • As a sign of excess liquidity, the Short-term Weighted Average Call Rate (WACR) dropped from 6.74% on October 27, 2023, to 6.43% on October 18, 2024.

During the two weeks ending October 18, 2024, credit offtake decreased sequentially by 0.3%, but it climbed by 8.0% when compared to December 2023. In absolute terms, As of October 18, 2024, credit offtake has increased by Rs 12.7 lakh crore over the previous nine months, totaling Rs 172.4 lakh crore. This credit expansion has been fueled by mortgages, MSMEs’ demand, and commercial real estate. However, a greater base effect, banks’ hesitancy to lend because of weak deposit growth, a lack of confidence in some asset classes, such unsecured lending, and RBI policies like increased risk weights and the planned LCR requirements are all to blame for the slowdown when compared to last year.

As of October 18, 2024, deposits have increased by 8.6% from December 2023 to Rs 218.1 lakh crore, with a 0.5% consecutive decline. Over the past nine months, deposits have increased by Rs 17.3 lakh crore in absolute terms. In FY25, deposits continued to be a major factor as banks stepped up their efforts to fortify their liability franchise. Additionally, the banks are obtaining cash at a somewhat greater cost through certificates of deposit.