Banks raise record Rs 13.17 lakh crore via CDs in 2025 amid weak deposit growth

CDs

• Banks raised Rs 13.17 lakh crore via CDs in 2025 due to slow deposit growth.
• Short-term CD rollovers dominate, inflating issuance numbers
• CD rates fell in 2025 but show signs of firming up after recent RBI policy cut

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Tepid deposit accretion and sustained pressure on CASA have pushed banks to aggressively tap the certificate of deposit (CD) market, with issuances touching an all-time high in 2025. Banks raised a record Rs 13.17 lakh crore through CDs in calendar year 2025 (till December 26), as slowing deposit growth forced lenders to increasingly rely on wholesale funding to support credit expansion, data from Prime Database showed.

This marks a sharp rise from Rs 12.34 lakh crore in 2024 and Rs 8.2 lakh crore in 2023, underlining banks’ growing dependence on market borrowings.

Bank of Baroda emerged as the largest fund-raiser through CDs in 2025, mobilising Rs 1.94 lakh crore, followed by HDFC Bank at Rs 1.74 lakh crore, Punjab National Bank at Rs 1.66 lakh crore, Canara Bank at Rs 1.01 lakh crore, and Union Bank of India at Rs 86,550 crore, according to Prime Database.

Issuances of certificate of deposit

CASA pressure, retail slowdown

The surge in CD issuances comes at a time when banks are grappling with sustained pressure on low-cost deposits.

“Currently, banks are facing persistent stress on CASA growth. Incremental savings are increasingly being diverted towards capital market instruments and physical assets such as gold and silver, supported by improved financial awareness and favourable market performance,” said V. Ramachandra Reddy, DGM – Head Treasury, Karur Vysya Bank.

This shift has also resulted in slower growth in retail term deposits, forcing banks to lean heavily on senior citizen deposits and bulk deposits to sustain deposit accretion, even as credit demand remains strong.

Top five issuers of CDs

Short-tenor funding dominates

While headline CD issuance numbers appear elevated, market participants caution that much of the activity is driven by short-term rollovers rather than durable balance sheet expansion.

“Gross CD issuances during the current calendar year have touched an all-time high of Rs 13.25 lakh crore. However, a significant portion of this is concentrated in the three-month tenor, with rollover impact inflating aggregate numbers,” Reddy said.

Expectations of an easing interest rate cycle have discouraged banks from locking in longer-tenor funding, particularly one-year CDs, resulting in higher churn rather than stable funding.

Rates ease, but firmness returns

CD yields have moderated in line with RBI rate cuts during 2025, falling from around 8.00 percent at the start of the year to about 6.70 percent currently.

However, following the most recent policy cut, CD rates have shown signs of firming up, driven by tight systemic liquidity and growing market belief that the rate-cut cycle may be nearing its end.

Liquidity risks and the road ahead

With CASA and retail deposit growth remaining structurally weak, banks are expected to increase reliance on wholesale funding, including CDs, in the coming quarters.

“Higher dependence on short-tenor wholesale funding requires careful calibration. Banks will need to focus on attracting more LCR-accretive and stable retail deposits, even if it comes at a higher marginal cost,” Reddy said.