RBI Bulletin: Credit–deposit gap narrows as deposit mobilisation finally picks up

Bank credit

India’s scheduled commercial banks sustained their robust lending momentum through November, but what stood out in the latest data was a notable turnaround in deposit growth. While credit demand continued to expand at a healthy clip, deposits, which had been trailing for months, registered a meaningful acceleration in November, easing earlier concerns about funding pressures in the banking system, according to the Reserve Bank of India’s (RBI) monthly bulletin.

This shift helped narrow the wedge between credit and deposit growth from 1.5 percentage points at the end of October to 1.3 percentage points by November 28, bulletin said.

On December 12, Moneycontrol reported that bank credit growth stayed firmly in double digits for the seventh straight week, rising 11.42 percent year-on-year in the week ended November 28, extending a run that began after the government announced GST rate cuts in early September.

According to the Reserve Bank of India’s (RBI) data, credit growth was 11.28 percent as of November 14, before edging up to 11.42 percent.

Weekly prints since September have consistently remained above 10 percent: 11.18 percent (Oct 31), 11.36 percent (Oct 17), 11.27 percent (Oct 3), 10.29 percent (Sep 19), and 10.21 percent (Sep 5).

On September 3, the GST Council approved a new two-tier structure of 5 percent and 18 percent. Finance Minister Nirmala Sitharaman, who chairs the Council, said the reductions were aimed at “the common man and the middle class.” Items shifted to the 5 percent slab included hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other household articles.

In absolute terms, bank credit stood at Rs 200.11 lakh crore as of November 28, up from Rs 179.59 lakh crore a year earlier, and Rs 198.54 lakh crore as of November 14.