Bank Efforts Boost Deposit Growth in FY 2025

Efforts by banks to increase their deposit bases are showing positive results, as seen in the strong deposit growth in fiscal year 2025. Data from the Reserve Bank of India (RBI) reveals that from March 22 to May 3, deposit growth was nearly twice as fast as credit growth. During this period, bank deposits grew by 2.1%, reaching Rs 209.4 trillion, while credit grew by 1.2% to Rs 166 trillion.

The increase in deposit growth comes amid intense competition among banks to attract funds. After slower deposit growth in the previous fiscal year, many banks raised interest rates on deposits to attract more depositors. Recently, the State Bank of India (SBI) increased interest rates on fixed deposits with maturities of less than one year.

Analysts say that banks have been focusing on increasing deposits in the fourth quarter, which has led to faster deposit growth. This trend is expected to continue into fiscal year 2025 as banks aim to keep a balanced credit-deposit ratio, following advice from regulators.

With credit demand remaining strong across most banks, there is a need to gather more deposits to support this growth. The focus on deposits has increased after concerns from the central bank about high credit-deposit ratios at some banks.

Analysts expect deposit growth to be around 13-14% year-on-year (YoY), while credit growth is predicted to be around 12-13% YoY in fiscal year 2025. In the previous fiscal year, credit growth outpaced deposit growth significantly, driven by high demand for loans. Credit increased by 20.2% YoY to Rs 164.3 trillion, including the merger of HDFC twins, while deposits grew by 13.5% YoY to Rs 204.8 trillion by March 22.