New Delhi [India], November 5 : The banking sector's credit-to-deposit (CD) ratio has breached the 80 per cent mark in October 2025, indicating stronger credit offtake compared to deposit growth, according to a report by CareEdge Ratings.
The ratio increased to 80.4 per cent in the current fortnight, highlighting that banks are lending out more than 80 per cent of the deposits they hold.
It stated, "The credit-to-deposit (CD) ratio increased to 80.4 per cent in the current fortnight, surpassing the 80 per cent mark".
The rise in the CD ratio reflects a sharper expansion in credit offtake alongside relatively modest growth in deposits.
This shows that banks are seeing strong demand for loans and are actively lending. However, it also implies that less than 20 per cent of deposits are left as reserves for liquidity purposes.
This means banks have a smaller cushion to meet sudden deposit withdrawals or fresh loan demand unless they attract new deposits.
As of October 17, 2025, aggregate bank deposits stood at Rs238.8 lakh crore, reflecting a 9.5 per cent year-on-year rise but a 1.0 per cent sequential decline over the previous fortnight.
The decline in deposits during the current fortnight was attributed to temporary factors such as festive-season cash withdrawals and a rise in currency in circulation, which increased by around Rs1 lakh crore year-on-year.
Time deposits, which form the bulk of the banking system's deposits, accounted for 87.6 per cent of total deposits and grew 8.6 per cent year-on-year to Rs209.1 lakh crore. This marked a slowdown from the 11.6 per cent growth seen during the same period last year.
Meanwhile, demand deposits rose 16.9 per cent year-on-year compared to 13.0 per cent a year ago, and currently stand at Rs29.8 lakh crore, comprising 12.4 per cent of the total deposit base.
On the lending side, total credit offtake reached Rs192.1 lakh crore as of October 17, 2025, marking an 11.5 per cent year-on-year growth.
The rise in credit was mainly driven by seasonal festive demand, GST rate reductions, increased activity in the retail and MSME sectors, and some pick-up in corporate borrowing due to higher bond yields.
Additionally, strong vehicle financing during the festive season further boosted overall credit growth. The current credit growth rate matches last year's pace of 11.5 per cent, excluding the impact of merger effects.
So the breach of the 80 per cent CD ratio reflects the banking system's robust lending momentum but also raises concerns about liquidity, as deposit growth continues to lag behind credit expansion.
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