Credit growth outpaces deposits for large banks

MUMBAI: Large banks show a continued trend of credit growth outpacing deposit mobilisation in the quarter ended Dec 31, 2025, with most lenders reporting advances rising faster than liabilities, and shifting deposit mix in favour of term deposits over current and savings accounts (CASA).

India's largest private bank HDFC Bank reported gross advances of around Rs 28.5 lakh crore at the end of Q3 FY26, up 11.9% from the year-ago period, and period-end deposits of about Rs 28.6 lakh crore, up 11.5% year-on-year, despite the bank's stated objective of reducing its credit to deposits ratio.

Of the total deposits, current and savings account deposits stood near Rs 9.6 lakh crore, growing 10.1% while time deposits (Rs 19 lakh crore) grew 12.3% highlighting the continuing shift from low cost to high cost products. The higher share of term deposits reduces margins for banks because of the higher costs plus the fact that in a falling rate regime term deposits take 2-3 years to reprice.

Bank of Baroda's provisional update showed global advances at Rs 13.4 lakh crore, a rise of 14.6% from Dec 31, 2024, and global deposits at Rs 15.5 lakh crore, up 10.3% year-on-year. Domestic advances were near Rs 10.7 lakh crore (up 13.5%) and domestic deposits about Rs. 13.1 lakh crore up 11.1%.

For Punjab National Bank Global advances rose 10.2% to Rs 11.9 lakh crore while global deposits rose 8.3% to Rs 16 lakh crore. The credit to deposit ratio increased to 74.2% from 72.6% a year ago. At Union Bank of India, global gross advances reached Rs. 10.2 lakh crore in Q3 FY26, up 7.1% from the year-ago quarter, while global deposits stood at Rs 12.2 lakh crore, up 3.4% y-o-y but down about 1% sequentially from the Sept 2025 quarter.