Commercial banks may have to raise deposit rates more to meet a surge in credit demand; while banks have swiftly transmitted increases to lending rates, deposit rates have been laggards for most’
Commercial banks may have to raise deposit rates more to meet a surge in credit demand, the central bank added. The Reserve Bank has raised rates aggressively this year to tame inflation. While banks have swiftly transmitted the increases to their lending rates, deposit rates have been laggards for most.
“During 2021-22, as credit growth picked up and deposit growth moderated, the incremental credit-deposit (C-D) ratio reached a four-year high,” the RBI said in its report. Loans of Indian banks rose 17.5% in the two weeks to December 2 from a year earlier, while deposits rose 9.9%, the latest data from the RBI showed earlier in the month.
“Incremental credit growth in FY2023 is expected to remain at an all-time high of Rs.18.0-19.0 trillion in FY2023, which will be significantly higher than the previous high of Rs. 11.4 trillion in FY2019
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