Mumbai: Banks in December have issued certificate of deposits worth Rs one lakh crore, the highest in any month during the current financial year to bridge the gap between credit growth and railing deposit growth, the Reserve Bank of India said in its January 2024 Bulletin released on Thursday.
In the aftermath of regulatory measures announced by the RBI in November 2023 relating to consumer credit and bank credit to NBFCs, the yield on 3-month certificates of deposit (CDs) hardened as banks resorted to higher CD issuances to meet funding requirements. In the primary market, fund mobilisation through issuances of CDs rose to Rs 5.6 lakh crore during 2023- 24 (up to December 2023), higher than Rs 4.9 lakh crore a year ago said the RBI Bulletin.
Aggregate deposits with banks increased by 12 per cent (8.7 per cent a year ago). On the other hand, loan growth stood at 15.6 per cent as on December 29, 2023 (14.9 per cent a year ago). In response to the 250 bps hike in the policy repo rate, banks average lending rate on fresh and outstanding rupee loans increased by 183 bps and 108 bps, respectively, during May 2022-November 2023. On the other hand, the average domestic term deposit rates on fresh and outstanding rupee deposits increased by 231 bps and 175 bps, respectively.With the statutory requirements for cash reserve ratio and statutory liquidity ratio at 4.5 per cent and 18 per cent, respectively, around 77 per cent of deposits were available with the banking system for credit expansion as on December 29, 2023.
