The RBI's 100 basis point rate cut since February has led to a cooling in credit offtake and deposit growth, according to a CareEdge report. Despite banks reducing deposit rates, deposit growth still surpasses credit offtake. Deposits fell by 0.44% sequentially, while credit offtake grew by 9.6% year-on-year, slower than last year's 15.5%. The report notes intensified competition in the bulk deposit segment.
New Delhi [India], July 3 (ANI): With a 100 basis point repo rate cut by the Reserve Bank of India (RBI) since February, Credit offtake and deposit growth have cooled, noted a report by CareEdge.
However, despite the rate cut and banks reducing deposit rates, deposit growth continues to outpace credit offtake in the current fortnight.
"Credit offtake and deposit growth have cooled, with deposit growth continuing to outpace credit offtake in the current fortnight," noted the report
The report highlights that deposits fell by 0.44 per cent sequentially, reaching Rs 230.7 lakh crore as of June 13, 2025, lower than the 12.1 per cent growth (excluding merger impact) recorded last year.
This decline was weighed down by banks' reliance on certificates of deposit to meet their funding needs, amid subdued deposit growth, as competition has intensified in the bulk deposit segment.
Additionally, credit offtake reached Rs 183.1 lakh crore, marking an increase of 9.6 per cent y-o-y, significantly slower than last year's rate of 15.5 per cent.
This slower growth rate in the credit offtake can be attributed to a high base effect and muted growth across segments, including retail.
"The Short-Term Weighted Average Call Rate (WACR) decreased to 5.27% as of Jun 20, 2025, from 6.68% on Jun 21, 2024. This decline follows three successive repo rate cuts and liquidity infusion by the Reserve Bank of India (RBI)," CareEdge said.
Furthermore, the Credit-Deposit (CD) ratio also experienced a slight rise, meanwhile, it was still below the 80 per cent mark for the six consecutive fortnights. The rise in CD ratio was driven by deposit outflow compared to a growth in credit offtake of Rs 0.59 lakh crore during the current fortnight.
The report also mentions that, overall government investments which stand at Rs 66.9 lakh crore, reflect y-o-y growth of 7.4 per cent but, a sequential decline of 0.2 per cent.
"The credit-to-total-assets ratio witnessed a marginal downtick and decreased to 69.4%, while the Government Investment-to-total-assets ratio also reduced to 25.3%, for the fortnight ending June 13, 2025," the report said. (ANI)