Analysts Predict Bank Credit Growth Will Surpass Deposits in FY27
India banks’ credit growth seen outpacing deposits in FY27: Analysts
The Economic Times
Image: The Economic Times
In fiscal year 2027, India's bank credit growth is projected to outpace deposit growth, with estimates of 12-14% for credit and 10-12% for deposits. This trend reflects ongoing shifts in the banking sector, with analysts attributing the changes to a projected GDP growth of around 7%.
- 01Credit growth is expected to be 12-14% in FY27.
- 02Deposit growth is projected at 10-12% for the same period.
- 03The overall credit-deposit ratio reached an all-time high of 85%.
- 04Revised liquidity coverage ratio norms may release ₹2.7-3.0 lakh crore for lending.
- 05Declining CASA ratios pose a challenge for banks' net interest margins.
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Analysts forecast that in fiscal year 2027, India's bank credit growth will outpace deposit growth, with credit expected to expand by 12-14% compared to 10-12% for deposits. This trend follows a significant increase in credit growth in FY26, which rose by 16.1%, while deposits increased by 13.5%. The Reserve Bank of India (RBI) reports that total bank deposits reached ₹262.30 lakh crore as of March 31, 2026, marking an increase of ₹31.14 lakh crore. In contrast, bank credit stood at ₹213.61 lakh crore, reflecting an annual increase of ₹29.59 lakh crore. The credit-deposit ratio has reached an all-time high of 85%, indicating a tightening of the gap between credit and deposit growth. Analysts also note that revised liquidity coverage ratio norms could provide an additional ₹2.7-3.0 lakh crore in lendable resources, although declining current and savings account ratios present ongoing challenges for banks' profitability.
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The anticipated increase in credit availability may benefit borrowers, potentially leading to lower loan costs. However, the shift towards more expensive funding sources could affect interest rates on loans for consumers.
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