IndusInd's loan book shrinks, Yes Bank slowdown contrasts private peers' strong deposit growth in Q2

Banks

Even though the stress on deposit mobilization persists, private banks have beaten state-owned lenders on this front in the second quarter of the current financial year, Moneycontrol’s analysis on provisional numbers showed.

The deposit growth of private banks remained in the range of 7.1-15.1 percent year-on-year in Q2FY26, higher than 9.28-12.13 percent growth registered by state-owned lenders.

In the private banks space, HDFC Bank’s total deposit average increased by 15.1 percent year-on-year, and Kotak Mahindra Bank’s total deposit average grew 14.6 percent year-on-year. However, IndusInd Bank loan book shrank for second consecutive quarter, while Yes Bank's growth rate slowed down significantly in Q2.

Similarly, state-owned banks that have registered higher deposit growth are Bank of Maharashtra with 12.13 percent growth year-on-year, followed by 12 percent growth for Indian Bank. And 10.9 percent of Punjab National Bank.

Banks have been struggling with deposit mobilisation over the last few quarters, especially on the CASA front, due to unattractive interest rates relative to other financial products.

Nonetheless, banks, especially PSBs, have been able to manage the CASA deposit ratio as per the guided level or slightly lower, thanks to the introduction of innovative products.

Stress on CASA deposits increased after the central bank slashed the repo by a full 1 percent, leading to banks also lowering rates on these deposits. The RBI (Reserve Bank of India) cut the policy rate to support growth.

However, state-owned lenders have outpaced its private peers in the advances growth in Q2FY26. The analysis of data showed that state-owned banks’ advances grew 10.7-16.87 percent year-on-year, as compared to 6.5-16.67 percent.

Bank of Maharashtra registered an advances growth of 16.87 percent in July-September quarter, followed by 16.16 percent year-on-year growth for Punjab and Sind Bank.