Below Quote on Bank`s CD ratio By Cyril Charly, Research analyst at Geojit Financial Services
As the domestic economy recovers, Indian banks are experiencing strong demand for loans while facing challenges in balancing deposit flows, resulting in the CD ratio increasing from 70.0% in Q2FY22 to pre-COVID levels of 75.9% in Q3FY23. While the current ratio does not create significant concerns, further expansion could force banks to raise deposit rates to attract more funds or rely on market borrowings, both of which would impact margins. Going forward, we expect moderation in credit demand along with a slight acceleration in deposit growth; however, deposit growth is not expected to outpace, leading to a further increase in the CD ratio, albeit at a slower pace.
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