Surge in Bank Borrowings Hits Record High in 2023

Data from the RBI revealed that average fortnightly bank borrowings surged to Rs 6.39 lakh crore from January 13 to December 15, 2023—a staggering 67% increase compared to the same period in 2022.

Analysts pointed out that these figures mainly encompassed short-term funding channels like interbank repo operations and the use of tri-party repos. Notably, certificates of deposits were not included, while instruments such as additional tier-1 bonds and infrastructure bonds were part of the borrowing data.

Experts attribute the surge to a liquidity deficit for a significant portion of 2023, compelling banks to borrow. Additionally, rising deposit rates prompted banks to explore options to optimize borrowing costs and safeguard their net interest margins. Recent RBI data also highlighted a year-on-year bank credit growth of 20.2% as of December 15, 2023, outpacing deposit growth, which stood at 14.0%. This trend of persistent credit growth exceeding deposit growth has been observed since April 2022.

Soumyajit Niyogi, Director at India Ratings & Research, emphasized that robust credit growth over two consecutive years forced banks to diversify their options to maintain effective asset liability management.

In a noteworthy development, fortnightly bank borrowings reached an all-time high of Rs 8.46 lakh crore on September 8, 2023—almost Rs 3 lakh crore higher than the previous high of Rs 5.49 trillion in 2022, recorded on October 21.