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24 July 2026

Bank credit-deposit ratio at 62-year high

The credit-deposit ratio is a key macroeconomic indicator of banking sector health and liquidity, directly relevant to the mobilization of resources and economic growth syllabus in GS3.

1 min read 2 questions 1 prelims

Notes

  • The Credit-Deposit (CD) ratio of Indian banks reached a 62-year high of 82.6% in Q1 of fiscal 2027.
  • Data from the Centre for Monitoring Indian Economy (CMIE) indicates loan growth of 18.6% YoY (reaching ₹219.3 lakh crore) compared to deposit growth of 13.3% (reaching ₹265.4 lakh crore).
  • The 5-percentage-point variance between loan and deposit growth is the widest observed since the June quarter of fiscal 2024.
  • Analysts attribute the high CD ratio to the redeployment of excess investments from bank balance sheets into the loan book.
  • Banks are currently maintaining capital at lifetime highs, which is contributing to increased lending capacity.
  • The trend reflects a shift in the composition of bank liabilities over the last five years.

Questions

  1. What are the macroeconomic implications of a rising Credit-Deposit (CD) ratio in the Indian banking sector? Discuss how the redeployment of excess investments impacts liquidity management for commercial banks. 150 words
    Attempt this — 150 words in 8 min
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  2. The widening gap between credit growth and deposit mobilization poses significant challenges for the stability of the Indian financial system. Analyze the structural factors contributing to this trend and evaluate the role of regulatory oversight in ensuring sustainable credit expansion. 250 words
    Attempt this — 250 words in 11 min
    0 / 250 words 11:00

Prelims

  1. What does the Credit-Deposit (CD) ratio primarily measure in the context of the Indian banking system?

Syllabus

Topics

Sources

250words.in · https://250words.in/daily/2026-07-24/bank-credit-deposit-ratio-at-62-year-high