← Business Metric: Financial (all topics)
Credit-deposit ratio
What it is
Advances as a percentage of deposits - the standard measure of how far a bank has lent against its funding base. A high ratio means little headroom to grow loans without raising deposits first
The system ratio reached ~83% in mid-2026, an all-time high against a long-run average near 74%, so the constraint on credit growth has shifted from loan demand to deposit supply
Impact on industries
- Deposit mobilisation is now the binding constraint - credit growth is expected to moderate unless deposits accelerate, however strong loan demand is
- Banks running above 90% have acute funding pressure and must chase deposits at price, which compresses margin exactly when growth is available
- The cause is household behaviour - deposits are losing share to mutual funds, direct equity and SIPs, so the pool grows slower than nominal GDP
- System-level stress is not imminent - RBI has supported liquidity through CRR reductions worth over 1% of deposits, though buffers are thin at individual banks