Mumbai, Nov 23 Indian banks have significantly increased their borrowing through Certificates of Deposit (CDs), to nearly Rs 55,000 crore in the fortnight ended November 14, the highest since mid-September, according to Reserve Bank of India (RBI) data.
This surge is driven by strong credit (loan) demand that continues to outpace deposit growth in the banking system.
The volume of CD issuances in the first half of November 2025 was double that of the preceding two fortnights.
The banking system's credit-deposit ratio has crossed the 80 per cent threshold for the first time, reaching 80.47 per cent by October 31, 2025.
This indicates that banks are lending out a very high proportion of their deposits and need alternative funding sources.
Banks are relying on market borrowings like CDs to meet the persistent demand for loans, as deposit growth remains in single digits while credit growth is in strong double digits due to the growing economy.
The surge in CD borrowing was partly influenced by a fall in short-term borrowing rates after the set lower-than-expected cut-off yields at a recent treasury-bill auction, making CD issuances more attractive, according to market sources.
Funds raised through certificates of deposit surged as borrowing rates fell after the RBI set lower-than-expected cut-off yields at its weekly treasury-bill auction, leading banks to step up issuances of certificates of deposit.
The RBI set the cut-off on the 91-day T-bill of 5.38 per cent which was lower than market expectations, analysts said.
There is also a healthy demand for CDs from mutual funds, which further supports banks' ability to issue these instruments.
Banks are expected to continue relying on CDs to fund year-end credit demand, particularly during the festive season when retail sales peak, market analysts said.
CDs are negotiable money market instruments issued by banks with maturities ranging from a minimum of seven days to a maximum of one year.
CDs serve as a cost-effective alternative to bulk term deposits, contributing to the overall deposit pool of banks.
Additionally, they help banks replenish maturing deposits, ensuring smoother liquidity management, which reinforces their dependence on such instruments
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