Credit deposit ratio narrowing, trend to continue: Nomura

Moneycontrol Bureau

The Reserve Bank of India (RBI), which has been expressing concerns over widening gap between credit and deposit growth, has a reason to cheer.

Why?

Sonal Varma and Aman Mohunta, economists at Nomura Financial Advisory observe that slower economic activity and high deposit interest rates have moderated credit growth but boosted deposit growth. Consequently, the gap between deposit and credit growth has narrowed down from -8 basis points in December 2010 to -2.7 basis points in June this year. 

This is what they said in their note today: