Loan‑to‑deposit ratios (LDRs) across Indian banks have climbed to an all‑time high of 81% in the December quarter. This shows that banks are lending faster than they are gathering deposits, a trend that could affect both borrowers and savers.
Why the LDR Matters
The LDR measures how much of a bank’s deposits have been turned into loans. A higher ratio means the bank has less cushion of safe deposits to fall back on, which can lead to higher deposit rates or limit the bank’s ability to pass on central‑bank rate cuts.
Key Numbers from Major Banks
- HDFC Bank: Loans grew 12% YoY, deposits 11.5%; LDR almost reached 100% with advances of ₹28.44 lakh cr and deposits of ₹28.59 lakh cr.
- Bank of Baroda: Loans up 14.57% YoY to ₹13.44 lakh cr, deposits up 10.25% to ₹15.47 lakh cr.
- Punjab National Bank: Deposits rose 8.5% to ₹16.6 lakh cr, loans rose 11% to ₹12.32 lakh cr.
- Union Bank of India: Deposits up 3.4% to ₹12.22 lakh cr, loans up 7.13% to ₹10.16 lakh cr.
- Axis Bank (private): Loans up 14.1% to ₹11.70 lakh cr, deposits up 15% to ₹12.60 lakh cr.
- Kotak Mahindra Bank: Loans up 16% to ₹4.80 lakh cr, deposits up 14.6% to ₹5.42 lakh cr.
- Yes Bank: Loans up 5.2% to ₹2.57 lakh cr, deposits up 5.5% to ₹2.92 lakh cr.
- RBL Bank: Loans up 13% to ₹1.04 lakh cr, deposits up 12% to ₹1.19 lakh cr.
- IndusInd Bank: Loans fell 13.1% to ₹3.18 lakh cr, deposits fell 3.8% to ₹3.94 lakh cr.
What This Means for Depositors
With the system‑wide LDR at 81%, banks may need to offer higher interest rates on savings and fixed‑deposit accounts to attract more money. If deposit growth stays weak, banks could also have limited scope to lower loan rates even if the RBI cuts its policy rate.
Non‑Bank Lenders Also Growing
- Bajaj Finance: New loans rose 15%, assets under management grew 22% to about ₹4.85 lakh cr; deposits stood at ₹71 billion.
- Poonawalla Fincorp: AUM jumped 77.5% to ₹55 billion.
- M&M Finance: Disbursements rose 7% to ₹17,600 crore, total assets grew ~12% to ₹1.29 lakh cr.
Outlook
Analysts say that to bring the LDR down toward the 90% target by FY27, banks will need a strong bounce in deposit growth, especially in the March quarter. Until then, savers should watch for possible rate hikes on deposits, and borrowers might see loan rates stay steady.
Disclaimer
Remember, this is just perspective, not a prediction. Do your own research and consider your personal financial situation before making any decisions.