Deposit Growth Continues to Outpace Credit Offtake

As per the latest CareEdge Ratings report dated July 14, 2025, bank deposit growth has once again outpaced credit offtake, a continuation of a trend observed over the past several months.

As of June 27, 2025, credit offtake stood at ₹184.8 lakh crore, reflecting a year-on-year growth of 9.5%, which is significantly lower than last year’s 13.9% (excluding merger effects). This deceleration is largely due to a high base and weak momentum across segments—especially NBFC lending and retail credit.

Deposits, on the other hand, rose by 10.1% YoY to ₹234.3 lakh crore, slightly down from 10.6% last year. This moderate growth is attributed to factors like deposit repricing and rising appeal of alternative investments.

The Credit-to-Deposit (CD) Ratio remained below the 80% mark for the seventh consecutive fortnight, standing at 78.9% as of June 27, 2025.

Meanwhile, the Short-Term Weighted Average Call Rate (WACR) fell to 5.31% on July 4, 2025, from 6.50% a year ago, driven by three successive RBI repo rate cuts and ongoing liquidity infusion.

Notably, banks are increasingly relying on Certificates of Deposit (CDs) for funding, with issuances reaching ₹1.76 lakh crore in Q1 FY26 (up to June 13), down 3% YoY.

The report also shows a marginal decline in government investments (now at 26.1% of total assets), while commercial paper outstanding dipped slightly to ₹500,000 crore.

This comprehensive update emphasizes that deposit inflow remains robust, while credit growth is still facing structural and cyclical challenges.