Banks see strong deposit growth in Q3 outpaced by rapid credit expansion

HDFC Bank's C/D ratio surges to 99.5%

- SUBRATA PANDA & AATHIRA VARIER

A number of commercial banks have reported double-digit growth in loans and deposits on a year-on-year basis for the October-December quarter (Q3FY26), signalling a revival in credit demand following a cumulative 125-basis-point reduction in the policy repo rate by the Reserve Bank of India (RBI) during 2025.

Loan growth for most lenders, during the period under review, outpaced deposit accretion, indicating that challenges around resource mobilisation are likely to persist into 2026.

HDFC Bank, the country’s largest private-sector lender, reported nearly 12 per cent year-on-year growth in advances to ₹28.44 trillion in Q3FY26; deposits rose 11.5 per cent to ₹28.59 trillion. After several quarters, its loan growth exceeded deposit growth.

During the quarter, the bank mobilised ₹57,700 crore of deposits, while credit disbursements expanded by ₹75,300 crore. As a result, its credit-deposit (C/D) ratio rose to 99.5 per cent, up 65 basis points sequentially from 98.8 per cent.

HDFC Bank has been steadily bringing down its elevated CD ratio following its merger with erstwhile mortgage lender HDFC Ltd, which became effective in July 2023. Following the amalgamation, the CD ratio had crossed 110 per cent, compared with an average of around 85 per cent prior to the merger.