Credit-deposit ratio of banks rises to 82 pc: Report

India’s credit-deposit (CD) ratio has climbed steadily from 53 per cent in 2000–01 to 82 per cent as of December 15, 2025, reflecting ongoing financial deepening and stronger credit intermediation, according to a recent research report. The trend underscores improved financial development and aligns with robust economic activity.

Credit outpaces deposits as demand strengthens

The report notes that the incremental CD ratio crossed 100 per cent on several occasions, pointing to vigorous credit demand even as deposit growth remained comparatively lean. Banks met this demand by mobilising funds from alternative sources beyond traditional deposits.

Post-pandemic balance sheets rebound

Indian banks have posted a strong post-pandemic revival. Bank asset growth has rebounded sharply to 94 per cent of GDP, up from 77 per cent in FY21, indicating renewed credit intermediation and deeper financial penetration.

System scale expansion over two decades

• Deposits expanded from Rs 18.4 lakh crore to Rs 241.5 lakh crore during FY05–FY25.
• Advances grew from Rs 11.5 lakh crore to Rs 191.2 lakh crore over the same period.

Because advances grew faster than deposits, the CD ratio rose from 69 per cent in FY21 to 79 per cent in FY25, with the latest reading at 82 per cent by mid-December 2025.

PSBs’ market share stabilises and begins to recover

After a secular decline since FY08—when public sector banks (PSBs) held a 71 per cent share—PSBs are now gradually reclaiming market share, aided by balance sheet repair and a renewed appetite for lending. The latest data indicate PSBs are regaining ground particularly in advances.

CASA trends diverge across bank groups

While overall current account–savings account (CASA) ratios remained around 37 per cent, trends varied by bank type. Private sector banks strengthened their CASA shares, whereas foreign banks saw erosion, suggesting differing deposit mobilisation strategies and customer profiles.

Maturity profile and prepayment signals

A gap has emerged between the maturity profile of deposits and advances in the 6–12 months and 1–3 years buckets. With 35 per cent of advances concentrated in the 1–3 years segment, the data suggest a growing tendency for prepayment among borrowers.

Unsecured lending expands sharply

• Unsecured advances rose from Rs 2 lakh crore to Rs 46.9 lakh crore between FY05 and FY25.
• Their share in total advances increased to 24.5 per cent in FY25 from 17.7 per cent in FY05.
• PSBs account for roughly half of unsecured lending, followed by private sector banks.

Banking workforce doubles, skills intensify

Total employment in the sector nearly doubled over two decades, from 8.6 lakh to 18.1 lakh. Private banks account for 46 per cent of the workforce and PSBs for 42 per cent. The proportion of officers climbed from 36 per cent to 76 per cent, highlighting greater skill intensity and a shift toward higher-value roles.

Balance sheets scale up significantly

Indian banks’ asset size grew from Rs 23.6 lakh crore in FY05 to Rs 312.2 lakh crore in FY25, illustrating the sector’s substantial scale-up alongside broader economic formalisation and financialisation.

Outlook

The sustained rise in the CD ratio, broad-based balance sheet strengthening, and recovery in PSBs’ market share point to continued momentum in credit intermediation. With deposits and advances both expanding and unsecured lending growing in prominence, banks appear positioned to support ongoing investment and consumption needs, even as they balance funding mix, maturity profiles, and asset quality considerations.