Credit offtake continues to moderate and is converging with the deposit growth highlighting the system-wide challenge in shoring up deposits.
Credit offtake increased by 5.3% compared to December 2023, to reach Rs 168.1 lakh crore as of July 26, 2024. Growth in personal loans and MSMEs continues to account for this increase. Meanwhile, sequentially credit growth remained flat. This slowdown can be attributed to RBI measures like higher risk weights on unsecured loans and a higher base effect, according to a CareEdge report.
Deposits rose at 5.5% compared to December 2023 and reached 211.9 lakh crore as of reported July 26, 2024), driven by growth in time deposits. Sequentially deposits increased by 0.1%.
The Short-term Weighted Average Call Rate (WACR) has remained the same at 6.47% as of August 2, 2024, compared to 6.39 as of August 4, 2023.
Deposit growth
Meanwhile, in absolute terms, deposits have expanded by Rs 11.1 lakh crore over the last 8 months. Deposits would continue to be prominent in FY25 as banks intensify efforts to strengthen their liability franchise. The banks are also sourcing funds via the certificates of deposits (at a relatively higher cost) which have shown significant traction. This focus aims to prevent constraints on credit uptake due to deposit growth.
The CD ratio has been generally hovering around 80% since September 2023. The CD ratio saw a decrease of 5 bps, compared to the previous fortnight, and stood at 79.3% for the fortnight (July 26, 2024). If we exclude the merger impact, the CD ratio for the current fortnight stood at 77.3% compared to 77.6% on July 28, 2023.
The credit to total assets ratio remained flat compared to the previous fortnight and stood at 68.6% for the fortnight (July 26, 2024). The Government Investment to Total Assets Ratio witnessed a downtick of 1 bps and stood at 25.7%. Meanwhile, overall government investments stood at Rs 63.1 lakh crore as of July 26, 2024, reporting a growth of 8.1% y-o-y, and remained flat sequentially.
On y-o-y performance, credit saw a growth of 13.6%, which was relatively slow compared to last year which saw a growth of 19.7%, on the other hand, deposits saw a growth of 10.6%. Deposit growth, though showing improvement, has continued to lag credit growth in the past year.
