Synopsis
To bridge the gap, banks changed into to non permanent borrowings, issuing Rs 1.34 lakh crore worth of certificates of deposit (CDs) – the most effective ever for any two-week interval – underscoring their endured reliance on market funding to rob care of loan boost.
AgenciesMumbai: Banks are lending a higher proportion of their deposits, additional thinning liquidity buffers and rising the reliance on non permanent financing devices, the latest central bank knowledge confirmed. The credit-deposit (CD) ratio rose to a memoir 82.5% within the fortnight ended February 15, as credit boost outpaced deposit boost by 281 foundation aspects.
One foundation level is a hundredth of a share level.
To bridge the gap, banks changed into to non permanent borrowings, issuing Rs 1.34 lakh crore worth of certificates of deposit (CDs) – the most effective ever for any two-week interval – underscoring their endured reliance on market funding to rob care of loan boost.
“Amid strong credit demand, banks have increasingly tapped short-term market borrowings to supplement deposit growth,” said Sanjay Agarwal, senior director, CareEdge Ratings. “The record CD issuance highlights sustained reliance on market funding. The CD ratio remained elevated at 82.5%, marking the fourth consecutive fortnight at an all-time high.” In the fortnight ended February 15, deposits declined by ‘1.08 lakh crore, a sharper contraction in contrast with a ‘40,000 crore descend within the outdated fortnight.
Mixture bank deposits stood at ‘247.7 lakh crore, reflecting year-on-year boost of 10.9%, in contrast with 10.3% within the corresponding interval final year. Bank credit reached ‘204.3 lakh crore, expanding 13.7% year-on-year, versus 11.3% boost a year earlier.
To make sure, experts imagine the decline within the stride of deposit mobilisation within the latest fortnightly print does not signal liquidity stress. System liquidity remained in a surplus of ‘3.1 lakh crore as of February 15, 2026, supported by durable liquidity infusion by open market operations (OMOs) by the RBI.
Fight for Funds
Opponents for deposits has reshaped pricing dynamics within the banking machine. With households diversifying into non-bank monetary products, lenders maintain been compelled to step up deposit mobilisation, generally at higher charges. This renewed contest for stable liabilities has constrained banks’ ability to transmit protection price cuts, resulting in a slower decline in lending rates no matter aggressive monetary easing, experts said. “Banks have been actively using the certificate of deposit market to meet short-term asset-liability management requirements,” said Rakesh Valecha, senior director & head – Core Analytical Neighborhood, India Ratings.
“CDs have emerged as a strategic liability tool, offering bulk funding at competitive rates and flexibility in liquidity management. Given the strong momentum in the primary CD market, we expect issuance to remain elevated.”
