Credit Growth Nears 12% While Deposit Growth Slows to 9.35%, RBI Data Shows

Bank credit growth stayed firm at nearly 12% year-on-year till December 15, even as deposit growth slowed further to 9.35%, according to revised data released by the Reserve Bank of India (RBI).

This widening gap shows continued pressure on deposits in the banking system.

Credit-Deposit Gap Widens Further

The difference between credit and deposit growth stood at 263 basis points, underlining tight liquidity conditions for banks.

Earlier data for the fortnight ended December 12 had already shown a similar trend, with credit growth at 11.7% and deposit growth at 9.7%.

Revised Reporting Timeline by RBI

The RBI has aligned credit and deposit data reporting to the 15th and 30th of each month, though the data will still follow the earlier fortnight-based reporting structure.

Loan and Deposit Levels as of December 15

As per revised figures:

• Total bank credit rose to ₹196.69 trillion, up from ₹175.86 trillion a year ago
• Credit increased by ₹1.65 trillion during the fortnight
• Total deposits stood at ₹241.31 trillion, compared with ₹220.06 trillion last year
• Deposits, however, declined by ₹1.28 trillion during the same period

In the previous fortnight ending November 28, credit growth was 11.5%, while deposit growth was 10.2%.

Banks Face Pressure on Rates and Margins

Banks are facing a tough situation. On one hand, they want to lower deposit rates to protect their net interest margins (NIMs). On the other hand, they need enough deposits to fund rising loan demand.

Lower deposit returns are also pushing savers towards equity markets, limiting banks’ ability to cut rates further.

Read more: Sthree Suraksha Scheme Application Form: Kerala Women Can Apply Online to Get ₹1,000 Monthly Aid.

RBI Steps In to Ease Liquidity

To improve liquidity, the RBI has announced fresh measures, including:

• Open market operations (OMOs)
• A foreign exchange buy-sell swap

Together, these steps are expected to inject nearly ₹3 trillion into the banking system.

Impact of Repo Rate Cuts on Lending and Deposits

The RBI has reduced the repo rate by 125 basis points in the current easing cycle.

As a result:

• Lending rates on fresh rupee loans fell by 69 bps between February and October 2025
• Rates on outstanding loans declined by 63 bps
• Fresh term deposit rates dropped by 105 bps
• Rates on existing deposits softened by 32 bps

Conclusion

The growing gap between credit and deposit growth highlights ongoing liquidity challenges for Indian banks. While loan demand remains strong, slower deposit growth is limiting banks’ flexibility on interest rates. RBI’s liquidity measures may provide relief, but balancing credit expansion and deposit mobilisation will remain a key challenge in the coming months.

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