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Banking credit growth continued to moderate – CD ratio to align within regulatory comfort

ICICIdirect Research 13 Dec 2024 DISCLAIMER

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.

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