Major banks in India have reported that credit growth is outstripping deposit growth, signaling stronger demand for loans compared with savings accumulation. According to the latest data, lenders are increasingly extending credit to retail and corporate borrowers, while deposit mobilisation has not kept pace with the rise in loan demand.

Key Highlights

• Credit growth at large banks continues to outpace deposit mobilisation amid strong loan demand.
• Banks face funding pressures as lending expands faster than savings inflows across sectors.

This trend reflects robust borrowing activity across sectors such as housing, personal loans, and business credit, underscoring growing confidence among households and enterprises to take on additional financing. Analysts suggest that the widening gap between credit and deposits indicates healthy economic momentum, as businesses expand operations and consumers increase spending.

However, the imbalance also highlights potential funding pressures for banks, as slower deposit growth may lead lenders to rely more on alternative funding sources or costlier borrowing to support their expanding loan books. Banks typically prefer stable deposit bases to fund loans, so sustained divergence between credit and deposit growth will require careful liquidity management.

Also Read: Bank Credit Growth Remains Strong at 11.5%: Center

Despite these dynamics, industry observers note that asset quality remains largely stable, with non-performing loans contained within manageable levels. Banks are balancing the dual objectives of supporting credit demand while maintaining prudent risk controls.

Overall, the stronger pace of credit growth relative to deposits reflects a broadening recovery in economic activity, but it also underscores the importance of diversified funding strategies for banks as they navigate shifting market conditions.