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Banking credit growth continued to moderate – CD ratio to align within regulatory comfort
Banking credit growth has been decelerating from ~16% level in March 2024 to 10.6% for the fortnight ending 29th November 2024 standing at ₹173.6 lakh crore. Such continued deceleration is attributable to 1) increased risk weight on exposure to NBFC, personal loans and credit cards, 2) rising delinquencies in small ticket unsecured retail loans and 3) elevated competition in liabilities accretion.
Deposit accretion continued to remain in-line with credit off-take at 10.7% for the fortnight ended 29th November 2024 to ₹220 lakh crore, amid continuous effort of banks to garner liabilities and increase in interest offered on deposits.
While alignment of credit growth with deposit accretion is bringing CD ratio to comfortable level at ~80% level, however, margins could remain under pressure in near term, though banks have recently increased MCLR on select tenures.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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