India’s banking system credit-deposit (CD) ratio has reached 82.5%, indicating that banks are lending a larger share of their deposits. Credit growth is rising faster than deposit growth, leading banks to depend more on short-term borrowings like certificates of deposit (CDs) to support loan demand. Although deposits recently declined by ₹1.08 lakh crore, liquidity in the system remains strong due to support from the Reserve Bank of India (RBI). The trend reflects strong loan demand, especially from the retail and MSME sectors.
Highlights
- India’s banking system credit-deposit (CD) ratio has reached 82.5%, the highest level in recent times, showing that banks are lending a larger portion of their deposits.
- Credit growth is faster than deposit growth, with loans expanding about 13.7% year-on-year, while deposits grew at a slower pace.
- Because deposits are not increasing fast enough, banks are increasingly relying on short-term borrowings such as certificates of deposit (CDs) to fund loan demand.
- In the latest period, bank deposits fell by about ₹1.08 lakh crore, indicating temporary pressure on funding sources.
- Despite this, system liquidity remains in surplus (around ₹3.1 lakh crore) due to liquidity support measures by the Reserve Bank of India.
- The trend highlights strong demand for loans in sectors like retail and MSME, but it also increases competition among banks to attract more deposits.
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February 27, 2026
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