Indian Banks' Credit-to-Deposit Ratio Hits Record Amid Loan Demand and Deposit Challenges

Indian banks' credit-to-deposit (CD) ratio reached a record 81.75 by December 31, reflecting strong loan demand outpacing deposit growth. Analysts expect the ratio to rise further to 83.2 in FY27 as credit growth remains around 13%, exceeding deposit growth projected at 11.4%. Banks plan to bridge funding gaps by issuing certificates of deposit and corporate bonds amid challenges in deposit mobilization due to lower deposit rates and investor preference for higher returns elsewhere. Non-performing assets are expected to decline gradually through FY27.