In the last quarter of FY24, Scheduled Commercial Banks in India saw a significant increase in credit offtake, with a year-on-year growth of 19.3%. This growth amounted to Rs 26.6 lakh crore since March 2023, reaching a total outstanding credit of Rs 164.3 lakh crore as of March 31, 2024. The surge was primarily driven by a rise in personal loans, increased lending to Non-Banking Financial Companies (NBFCs), and the impacts of recent mergers, reflecting strong consumer demand and robust lending activities. The urban segment witnessed a rise in market share, showcasing a growing demand for credit in metropolitan areas due to corporate capex and increased utilization rates.
The western region outperformed other regions, recording a year-on-year growth of 20.4% in credit offtake, highlighting robust economic activities. The central region reported the highest credit growth of 21.6%, reaching Rs 15.1 lakh crore. The southern and northern regions also showed strong performances, with growth rates of 19.8% and 16.6% respectively. However, deposits grew at a slower pace compared to credit, with a year-on-year increase of 13.6% amounting to Rs 24.7 lakh crore, reaching a total of Rs 206.1 lakh crore by the end of March 2024. The metropolitan region led deposit growth at 14.7% year-on-year, indicating a steady inflow of funds from corporates and high-net-worth individuals.
Term deposits surpassed Current Account and Savings Account (CASA) deposits, with a year-on-year growth of 18.8%, driven by higher interest rates. The credit to deposit (CD) ratio saw a significant rise of 380 basis points to 79.7% in March 2024, fueled by higher credit growth and impacts of mergers within the banking sector. Private sector banks reported a strong credit growth of 27.9%, capturing a larger market share of 41.8%, a 282 basis points increase year-on-year. Public sector banks saw a credit growth of 13.6% year-on-year, expanding by Rs 10.5 lakh crore to Rs 87.6 lakh crore in Q4FY24. The recent HDFC merger played a key role in boosting the credit growth of private sector banks.
The Weighted Average Lending Rate (WALR) for Scheduled Commercial Banks rose by 11 basis points, reaching 9.83% in March 2024, reflecting tightening monetary policies. The Weighted Average Domestic Term Deposit Rate (WADTDR) also increased, up by 72 basis points to 6.88% year-on-year, making term deposits more attractive. The western region’s substantial economic growth contributed to its leading position in credit expansion, accounting for 34% of the total credit as of March 31, 2024. Urban and semi-urban areas reported healthy deposit growth at 13%, while metropolitan areas continued to dominate, gaining a market share of 55.2%.
The credit market is expected to remain buoyant, driven by ongoing economic recovery and strong demand for personal and corporate loans. Intense competition among banks for deposits is anticipated to continue as they seek sufficient funds to support growing credit demand. Rising interest rates on term deposits are likely to attract depositors, enhancing the overall deposit base. Overall, the outlook for the banking sector in India remains positive, with robust credit growth and increasing market share for private sector banks.
