After interest rates hike, banks' deposit growth surpasses credit growth after months

For the first time in the last few months, incremental deposit growth surpassed credit growth in the fortnight ended November 4 as banks aggressively raised deposit rates to garner resources in the wake of robust credit growth, reported Business Line.

Incremental deposits of all scheduled banks grew by ₹1,68,386.7 crore in the fortnight ended November 4, according to RBI data. During the same period, incremental credit rose by ₹44,119.16 crore.

In the preceding fortnight ended October 21, incremetal credit was up by ₹26,610.67 crore while deposits de-grew by ₹64,098.13 crore.

As per RBI data, as on November 4, interest rate on term deposits of over one year duration was higher in the 5.50/7.25 per cent band against 5.50/6.50 per cent as on October 21, 2022.

That deposit growth is lagging credit growth is underscored by the fact that as on November 4, year-on-year (y-o-y) deposit growth and credit growth stood at about 8 per cent and 16.81 per cent, respectively. It may be pertinent to mention here that issues relating to lagging growth in deposits vis-à-vis credit growth and asset quality, among others, were discussed at RBI Governor Shaktikanta Das’ meeting with top bankers on Wednesday.