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Key Points

The Reserve Bank of India's recent monetary policy has significantly impacted banking sector dynamics. Credit offtake has slowed down, growing at 9.6% compared to last year's 15.5%. Deposit growth has also cooled, with a 0.44% sequential decline in total deposits. These trends reflect the complex interplay of rate cuts, liquidity measures, and market competition in India's financial landscape.

Key Points: RBI Rate Cuts Impact Credit and Deposit Growth Trends

  • RBI's repo rate cuts lead to 9.6% credit growth versus previous 15.5%
  • Deposits fell 0.44% sequentially to Rs 230.7 lakh crore
  • Short-Term Weighted Average Call Rate drops to 5.27%
  • Credit-Deposit ratio rises slightly but remains below 80%
2 min read

RBI rate cuts lead to cooling in both credit offtake and deposit growth: Report

CareEdge report reveals slowing credit offtake and deposit growth following RBI's 100 basis point repo rate reduction

"Credit offtake and deposit growth have cooled - CareEdge Report"

New Delhi, July 3

With a 100 basis point repo rate cut by the Reserve Bank of India (RBI) since February, Credit offtake and deposit growth have cooled, noted a report by CareEdge.However, despite the rate cut and banks reducing deposit rates, deposit growth continues to outpace credit offtake in the current fortnight."Credit offtake and deposit growth have cooled, with deposit growth continuing to outpace credit offtake in the current fortnight," noted the report

The report highlights that deposits fell by 0.44 per cent sequentially, reaching Rs 230.7 lakh crore as of June 13, 2025, lower than the 12.1 per cent growth (excluding merger impact) recorded last year. This decline was weighed down by banks' reliance on certificates of deposit to meet their funding needs, amid subdued deposit growth, as competition has intensified in the bulk deposit segment.

Additionally, credit offtake reached Rs 183.1 lakh crore, marking an increase of 9.6 per cent y-o-y, significantly slower than last year's rate of 15.5 per cent. This slower growth rate in the credit offtake can be attributed to a high base effect and muted growth across segments, including retail.

"The Short-Term Weighted Average Call Rate (WACR) decreased to 5.27% as of Jun 20, 2025, from 6.68% on Jun 21, 2024. This decline follows three successive repo rate cuts and liquidity infusion by the Reserve Bank of India (RBI)," CareEdge said.

Furthermore, the Credit-Deposit (CD) ratio also experienced a slight rise; meanwhile, it was still below the 80 per cent mark for six consecutive fortnights. The rise in CD ratio was driven by deposit outflow compared to a growth in credit offtake of Rs 0.59 lakh crore during the current fortnight.

The report also mentions that overall government investments, which stand at Rs 66.9 lakh crore, reflect y-o-y growth of 7.4 per cent but a sequential decline of 0.2 per cent.

"The credit-to-total-assets ratio witnessed a marginal downtick and decreased to 69.4%, while the Government Investment-to-total-assets ratio also reduced to 25.3%, for the fortnight ending June 13, 2025," the report said.

- ANI

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Reader Comments

P
Priya S
As a small business owner, I've noticed banks are still hesitant to lend despite rate cuts. The paperwork and collateral requirements haven't eased at all. RBI needs to look at ground realities.
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Aman W
The deposit growth outpacing credit shows people are saving more than spending. Not good for economy in long run. Government should think about tax incentives to boost consumption.
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Sarah B
Interesting analysis! The CD ratio below 80% for six fortnights indicates banks have liquidity but aren't lending aggressively. Maybe risk aversion post some NBFC crises?
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Karthik V
RBI is doing balancing act between growth and inflation. But common man suffers either way - either high EMIs or low FD rates. Kya karein? 🤷‍♂️
N
Nisha Z
The sequential decline in government investments is concerning. At this crucial juncture of economic recovery, public spending should lead the way. Hope next budget addresses this.

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