Deposit constraints shadow Indian banking sector in March quarter. While overall loan growth remained robust at 13.7%, deposit growth lagged significantly at 10.8% through March 15, creating widening gaps between credit expansion and fund availability. HDFC Bank emerged as an outlier, achieving 14.4% deposit growth against 12% loan growth, bucking industry trends where peers struggled. Bank of Baroda also narrowed the gap with 12% deposit growth versus 16.2% loan expansion. The deposit challenge persists as investors increasingly favor equity markets and mutual funds over traditional banking deposits. Despite West Asia tensions and market volatility, analysts remain optimistic about sustained credit momentum in FY27, projecting 13.5% year-on-year growth supported by consumption-led recovery and GST-driven stimulus.
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