Analysts expect India’s bank credit to expand faster than deposits in FY27, with credit projected at 12–14% versus deposits at 10–12%. The outlook continues a pattern seen for more than a decade, raising liquidity management challenges. Revised liquidity norms could help, but falling CASA ratios remain a key risk to profitability.
Even without a fresh RBI push for rate hikes, some banks are increasing deposit interest rates. The reason, according to the report, is RBI’s focus on systemic stability, which is nudging banks to strengthen balance sheets by attracting more deposits. As competition for funds rises, banks may offer higher rates to keep liquidity comfortable.
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Over the past decade, public sector banks have lost major ground in deposits, with their share dropping from 76.3% to 56.3%. Private banks, by contrast, have steadily absorbed the shift, rising from about 20% to nearly 35%—suggesting a growing preference among depositors, especially wealthier customers.
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