₹100 Deposits, ₹97 Lent Out: How Banks Are Managing Record Credit Growth

New Delhi, India: Banks in India are lending at a pace faster than the rate of deposits, creating tight liquidity conditions in the system. In the current financial year, credit growth has reached 12%, while deposits have increased by 10%. Effectively, for every ₹100 deposited, banks are lending out approximately ₹97.

Credit vs Deposit Growth
According to a report by Times of India, the incremental credit-deposit ratio has risen to 96.9% as of the end of January, while the outstanding credit-deposit ratio stands at 82.3%. This indicates a strong demand for credit relative to deposits. RBI data shows aggregate deposits rose 10.2% to ₹23 lakh crore, whereas credit grew 12.2% to ₹22.3 lakh crore. On a year-on-year basis, credit growth hit 14.6% in January 2026, the highest in 19 months, compared to 11.4% the previous year. Deposit growth also improved from 10.3% to 12.5%.

Who Is Borrowing So Much?
Non-food credit increased by ₹25.7 lakh crore year-on-year, reaching ₹203.9 lakh crore. Bankers report that most lending is being funded through household savings rather than excess central bank liquidity. Credit growth is closely linked to economic activity and GDP expansion, prompting banks to raise their growth targets.

SBI Chairman C.S. Shetty said the bank is maintaining a balance between resource costs and growth, targeting at least 10% corporate credit growth over the next two quarters, with ₹7 lakh crore already in the pipeline. SBI also aims to increase market share in home and auto loans, revising its credit growth guidance for the year to 13.15%.

Future Outlook
ICICI Bank CFO Anindya Banerjee noted a clear momentum in sequential credit growth, which is expected to continue into Q4. Both retail and corporate segments are showing improvement. Kenra Bank MD & CEO Hardeep Singh Ahluwalia highlighted that retail and MSME loans are driving growth, with the RAM (Retail, Agriculture, MSME) book showing 18.7% growth, including 31.4% in retail and 13.7% in MSMEs.

Yield levels remain healthy, with MSME advances at 9.3% and retail loans at 8.9%. Savings deposits are growing at 8.5%, with individual savings accounts rising over 10% and current accounts increasing nearly 15%. Ahluwalia emphasized that the bank plans to maintain this retail momentum and capitalize on current growth trends.