The divergence between credit growth and deposit growth is a regular phenomenon that happens periodically and there is nothing much to worry about, claimed the former State Bank of India Chairman, Dinesh Khara.
As per the latest data of the Reserve Bank of India (RBI), as on July 26, 2024, deposit growth stood at 10.6 per cent, while credit growth was at 13.7 per cent
The divergence between credit growth and deposit growth is a regular phenomenon that happens periodically and there is nothing much to worry about, claimed the former State Bank of India Chairman, Dinesh Khara.
While speaking at the Global Fintech Fest 2024, Khara said, “ We have seen a similar kind of situation in 2003-04 also. It usually takes around 41 months for this divergence to get addressed. So our assessment was that by June 2025 or so, they should get addressed.”
As per the latest data of the Reserve Bank of India (RBI), as on July 26, 2024, deposit growth stood at 10.6 per cent, while credit growth was at 13.7 per cent. The credit to deposit ratio has been around 80 per cent since September last year.
Due to the continued divergence, banks have increasingly started relying on other sources of funding — issuance of certificates of deposits has amounted to Rs 3.49 lakh crore so far in this financial year. However, the economists of SBI recently claimed in their research report that the concern over the deposit growth is a statistical myth.
"The myth of a flagging deposit growth appears as just a statistical myth with credit growth outpacing deposit growth being tom-tommed as a deceleration in deposit growth," the report mentioned.
Khara, who retired from the position of the India’s largest public sector lender , echoed the same sentiment. He said, “ There are credible options that are available to take care of the book growth. We had mobilised at a time when nobody used to look at deposits, during the Covid period.”
On year-to-date basis, the shares of SBI bank has witnessed a surge of nearly 27 per cent on the National Stock Exchange.