In a first, banks' loan-deposit ratio breaches 80%

Another rate cut will make mobilising resources tough

- ANJALI KUMARI & MANOJIT SAHA

Commercial banks' credit-deposit (CD) ratio has, for the first time, topped the 80 per cent mark — the upper end of the regulatory comfort zone - signalling resource mobilisation challenges for lenders at a time when loan demand seems to be picking up in the economy. Commercial banks' CD ratio was 80.21 per cent for the fortnight ended October 31, RBI data showed.

The crucial banking ratio was over 80 per cent at the end of the last two reporting fortnights in October, Reserve Bank of India (RBI) data showed. In September too, it had crossed the 80 per cent mark, before dipping slightly in the next fortnight. A CD ratio in the range of 75-80 per cent is seen to be within the regulator's comfort zone.

The rise in the CD ratio is largely because growth in deposits has been sluggish and is now in single digits, lagging credit growth. RBI data shows banks' year on year deposit growth was 9.7 per cent in October, falling from 10.3 per cent in March. Credit growth during the same period improved to 11.3 per cent from 11 per cent.