Bank credit growth in India remained strong on a year-on-year basis in mid-April even as both lending and deposits declined sequentially following the customary surge seen at the end of March, according to a report by CareEdge Ratings.
Total bank credit stood at Rs 209.2 lakh crore as of 15 April 2026, marking a 15.0 per cent increase from a year earlier, compared with 10.3 per cent growth in the corresponding period last year. However, on a sequential basis, credit declined by Rs 4.40 lakh crore, or 2.1 per cent, from the previous fortnight as banks adjusted after accelerated year-end lending to meet annual targets, the report said.
The moderation this year was sharper than the contractions seen in the past two years, when sequential declines stood at 1.2 per cent and 1.08 per cent, respectively. CareEdge attributed the pullback primarily to post-year-end normalisation, where the higher base created by March lending moderates at the start of the new financial year.
Despite the fortnightly decline, the report noted that underlying credit momentum remains broad-based. Growth continued to be supported by retail lending, particularly gold and vehicle loans, sustained momentum in MSME financing, higher bank exposure to NBFCs, and selective improvement in infrastructure financing and corporate borrowing. CareEdge also noted that year-on-year comparisons could be partly influenced by the revised definition of the reporting fortnight under the Banking Laws (Amendment) Act, 2025.
Aggregate bank deposits showed a similar pattern. Deposits stood at Rs 256.5 lakh crore as of April 15, 2026, registering a 12.2 per cent year-on-year rise compared with 10.2 per cent growth in the same period last year. Sequentially, however, deposits fell by Rs 5.8 lakh crore, or 2.2 per cent, reflecting the reversal of higher balances typically seen at the end of March due to corporate adjustments and government flows.
Time deposits, which account for 87.4 per cent of total deposits, grew 10.9 per cent year-on-year to Rs 224.3 lakh crore. Demand deposits recorded a sharper 22.1 per cent rise compared with 7.3 per cent a year ago, indicating improved mobilisation in low-cost deposits despite the seasonal moderation.
The divergence between credit growth and deposit accretion widened further, with credit continuing to outpace deposits by around 284 basis points. As a result, the loan-to-deposit ratio edged up to 81.6 per cent for the fortnight ended April 15 from 81.4 per cent in the previous fortnight. Although lower than the all-time high of 83.0 per cent recorded in mid-March, the ratio remains elevated on a year-on-year basis, reflecting sustained pressure on banks’ funding profiles.
CareEdge said the uptick in the ratio was mainly due to the sharper sequential fall in deposits compared with credit.
The composition of bank balance sheets also showed marginal shifts. The share of bank credit in total assets remained stable at 74.0 per cent, while the proportion of government investments increased by 20 basis points to 24.3 per cent. The investment book stood at Rs 68.8 lakh crore, recording modest year-on-year growth of 2.9 per cent alongside a slight sequential decline.
In money markets, the weighted average call rate stood at 5.08 per cent as of April 17, marginally higher than 5.06 per cent in the previous fortnight and 17 basis points below the prevailing repo rate of 5.25 per cent, indicating comfortable liquidity conditions.
Short-term funding instruments reflected mixed trends. Certificates of deposit outstanding moderated sequentially to Rs 684.8 thousand crore on April 15, though they remained 32.0 per cent higher than a year earlier. In contrast, commercial paper outstanding increased to Rs 526.6 thousand crore, registering 1.0 per cent year-on-year growth after a period of moderation earlier in the year.
CareEdge said the data indicate that while the seasonal cooling of bank balance sheets is visible after March, the underlying trend of robust credit expansion relative to deposits persists, keeping liquidity and funding metrics under close watch in the new financial year. |
