Credit growth at 12% beats 10% deposit rise in April-Jan

Mumbai: Bank credit growth continued to outpace deposit mobilisation this financial year, tightening system liquidity even as lenders step up loan disbursements. By Jan-end 2026, the incremental credit-deposit (CD) ratio had climbed to 96.9%, sharply higher than the outstanding CD ratio of 82.3%, indicating that banks lent out nearly Rs 97 for every Rs 100 of fresh deposits raised during the year.

Data from the Reserve Bank of India showed aggregate deposits grew 10.2% in the financial year to Jan 31, with banks adding Rs 23 lakh crore. Credit expanded faster, rising 12.2% or Rs 22.3 lakh crore over the same period. In the year-ago period, deposits had grown 8.1% and credit 8.7%.

On a year-on-year basis, credit growth accelerated to 19-month high of 14.6% as of end-Jan 2026, compared with 11.4% a year earlier, while deposit growth improved to 12.5% from 10.3%. The sustained gap underscores that credit demand remains strong relative to deposit accretion.

Non-food credit rose Rs 25.7 lakh crore year-on-year to Rs 203.9 lakh crore. Bankers said the bulk of lending is being funded through household savings rather than surplus central bank liquidity, making credit growth more closely tied to economic activity and GDP expansion.

Reflecting the momentum, lenders have raised growth targets, which was communicated in their third quarter earnings call. C S Setty, chairman of State Bank of India, said the bank was "balancing resource costs alongside growth visibility of at least 10% in corporate credit over the next two quarters, supported by a Rs 7 lakh crore pipeline", while gaining market share in home and auto loans. SBI has revised its credit growth guidance to 13-15% for the year.

At ICICI Bank, CFO Anindya Banerjee said the momentum was clearly visible. "We have seen a pickup in the sequential growth rate, and we see that momentum sustaining into the fourth quarter as well," he said, adding that the improvement was broad-based across retail and corporate segments.

Canara Bank MD and CEO Hardeep Singh Ahluwalia said retail and MSME loans were driving growth. "Our RAM book is showing a growth of 18.7%, led by retail, which has grown 31.4%, while MSME is up 13.7%," he said. He added that yields remained healthy, at 9.3% for MSME advances and 8.9% for retail loans, supporting margins.

Ahluwalia said Canara Bank plans to build further on the retail momentum. "Our advances growth guidance is more than 13.6%, and we will capitalise on the momentum that has been built," he said. On the liability side, he noted savings bank deposits were growing 8.5%, with individual savings accounts rising over 10%, while current accounts grew nearly 15%.