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Banks trim gilts to power loan book as deposits lag
Mint New Delhi
|November 04, 2025
Banks have been liquidating their holdings in government securities in order to finance credit growth at a time deposits remain hard to come by, Reserve Bank of India (RBI) data showed.
Banks are mandated to hold at least 18% of their net demand and time liabilities (NDTL)-the net total a bank owes its customers and other banks-in government papers and other approved securities. They typically keep an additional 10 percentage points more in such securities.
The statutory liquidity ratio (SLR)-the percentage of aggregate deposits invested in liquid assets-of the banking sector was 26.5% on 17 October, down from 27.3% on 18 October 2024, RBI data analysed by Mint showed.
The SLR holdings were 26.7% of the NDTL on 19 September. Given that the NDTL was at ₹259.8 trillion on 17 September, a 10-basis point decline allows banks access to almost ₹26,000 crore in funds. "Some banks have offloaded investments to fund credit growth when deposit growth has not kept pace," said Madan Sabnavis, chief economist at Bank of Baroda.
This story is from the November 04, 2025 edition of Mint New Delhi.
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