Bank Deposits Grow Faster Than Loans in India: Key Insights from Latest Report
In a positive sign for India’s banking sector, bank deposits have outpaced credit growth by 20 basis points during the fortnight ending August 22, 2025. This comes from a fresh report by ratings agency CareEdge Ratings, highlighting shifts in how banks handle money and lending.
As of that date, total credit off-take reached Rs 186.4 lakh crore, marking a 10 per cent year-on-year (YoY) rise. That’s slower than the 14.9 per cent growth banks saw in the same period last year. The credit-deposit ratio stayed steady at 79.3 per cent, holding below 80 per cent for the 11th straight fortnight. This balance shows banks aren’t overextending loans compared to their deposits.
Deposits climbed 10.2 per cent YoY to Rs 235 lakh crore, a dip from the 11.3 per cent growth a year earlier. Experts point to ongoing deposit repricing—where banks adjust interest rates—and more attractive alternative investment options as key reasons for this slowdown in deposit growth. Still, it’s good news that deposits are growing faster than credit, helping maintain stability in the banking system.
On the credit side, banks added just Rs 0.39 lakh crore in loans over the fortnight. Credit growth slowed due to weaker demand from companies, low private capital spending, reduced unsecured personal loans, and less funding flowing to non-banking financial companies (NBFCs). Time deposits, which are fixed-term savings, grew 9.2 per cent to Rs 206.1 lakh crore, down from 10.9 per cent last year. In contrast, demand deposits—money you can withdraw anytime—jumped 18.2 per cent to Rs 28.9 lakh crore.
Interest rates in the interbank market also eased up. The short-term weighted average call rate (WACR), which tracks overnight borrowing between banks, dropped to 5.45 per cent as of August 29. That’s lower than the 6.59 per cent from a year ago and even dipped below the Reserve Bank of India’s (RBI) policy repo rate of 5.50 per cent. This follows three rate cuts this year and smart liquidity moves by the RBI to keep the money supply flowing smoothly.
Banks’ overall credit-to-assets ratio held steady at 72.1 per cent. Meanwhile, the government investment-to-assets ratio slipped by one basis point to 26.1 per cent. Total government investments rose to Rs 67.6 lakh crore, showing a healthy 6.2 per cent YoY increase.
This report sheds light on the evolving dynamics of India’s banking sector, with deposit growth vs credit growth trends signaling caution amid economic moderation. Keep an eye on RBI’s next moves for more on interest rates and liquidity in Indian banks.
