Banks push to grow deposits faster in bid to lower CD ratio

AFTER THE RESERVE Bank of India (RBI) raised concerns about the high credit-deposit (CD) ratio, banks have started taking steps to bring it down by growing deposits faster in the fourth quarter.

- SACHIN KUMAR

The provisional figures show that the deposit growth of several banks has outpaced loan growth in the fourth quarter which will result in moderation of CD ratio.

"Provisional business figures from 22 banks accounting for around 50% of the system loan/deposits indicate deposits growth (up 6% quarter-on-quarter) outpacing loans growth (up 3% qo-q)," said ICICI Securities in a report. "We argue that an unmissable trend from the business updates is the q-o-q improvement in loan to deposits ratio (LDR) for almost all banks," it said.

The LDR improvement phenomenon also applies to even select PSU banks which had one of the lowest LDR, added the report.