India Ratings Forecasts Elevated Loan-Deposit Ratio and Moderate Loan Growth for FY27

India Ratings projects loan growth at 13% for FY27, outpacing deposit growth expected at 11.4%, leading to a higher loan-to-deposit ratio of 83.2%. This elevated ratio poses funding challenges for banks, prompting increased issuance of certificates of deposit and corporate bonds to bridge the gap. Asset quality is expected to improve with gross non-performing assets declining. Non-bank finance companies are anticipated to adopt a cautious lending approach amid moderate growth, while the overall banking sector outlook remains neutral amid signs of economic recovery.