By Aditya Rao
The commercial deposit ratio (CD ratio) of scheduled commercial banks, at 77.91% during the fortnight ended March 1st, reached its highest level in three months.
The CD ratio over the 15-day period ended December 21, 2018 was 78.60%, which was at least the highest in the last two decades, showed data from the Reserve Bank of India (RBI).
The CD ratio increased due to slower deposit growth relative to higher credit growth. "The weaker growth in deposits is reflected in a steady increase in the ratio of CDs in stock, which is expected to reach 78% by the end of fiscal year 19, compared to 74% for fiscal year 18 and 73% at the end of the fiscal year 17. Banks will need to mobilize at least 19-20 million crores of new deposits through March 2020 to maintain the CD ratio close to 80%, which in itself would be the highest of the next ten years, "said Krishnan Sitaraman, senior director of CRISIL Ratings.
The incremental CD ratio, which was 74.60% in the fortnight of March 1, has remained below 100% since May 11, 2018. By the two weeks ended April 27, 2018, the incremental CD ratio is is set at 110.4%, according to the RBI data.
Bank deposit growth of 9.8% year-over-year in the two-week period ended March 1, 2019 slowed compared to year-over-year growth of 10.2%, which was the highest in one year. year and a half in the fortnight to February 15, showed the RBI data.
"The tightening of liquidity observed in October 2018 has eased, but the situation is far from normal. The CD ratio remains at a multi-year high and corporate bond spreads are high despite the weakening of the balance of payments (balance of payments) of 2018 and the RBI's assumption of responsibility. Oversized GMOs, "said Edelweiss analysts. PSBs have gained a market share of 770 basis points (bps) in deposits since fiscal 2011, the loss having increased in recent years. PSBs lost market share of 250 basis points in FY18 alone. However, the loss of market share is much less, at around 450 basis points since EX11 and 200 points in the market. base in the 18th year, said KIE analysts.
In the first nine months of fiscal year 19, banks have already raised deposit rates by 40 to 60 basis points on average. "We expect banks to focus on medium-term deposit mobilization with attractive rate offers for all the big names in the bulk and retail segments," said Rama Patel, director of CRISIL Ratings.