MUMBAI: Lagging deposit accretion poses the risk of constraining credit growth for banks in FY25, India Ratings and Research said on Thursday.
Maintaining its “neutral” outlook on the banking sector for FY25, the agency said the deposit growth is likely to moderate to 12-13 per cent in FY25 from the 13.8 per cent estimated for ongoing fiscal year. The loan-to-deposit ratio for the sector is at a five-year high of 81 per cent, which makes deposit growth as a crucial part in banks’ credit book expansions, it said.
The agency said it expects credit growth to come at 20.5 per cent in FY24, including the positive impact of the HDFC twins merger, and added that the same number will come at over 15 per cent in FY25.
The loan book mix for banks is likely to change in FY25 due to the dip in shares of exposures to the retail and non-bank lenders segments, the agency said, adding that a revival in private capex will help increase the share of corporate lending in the overall pie.
With inputs from PTI