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Currently, credit growth, which is the increase in loans and advances by banks, is growing faster than deposits, meaning banks are lending more than people are depositing. However, overall lending is still lower than it was at the same time last year. As of October 3, 2025, total credit reached ₹192.7 lakh crore, showing an 11.4% increase compared to last year. This growth has been supported mainly by seasonal demand during the festive period and by GST rate cuts, which made big-ticket items like housing, cars, and household appliances more affordable.
Banks also benefited from higher returns in bond markets and cheaper overseas borrowing, which allowed them to offer competitive rates. Despite this, the growth is still slower than last year’s 14.1%, partly because last year’s base was very high, corporate lending has slowed down, and loans to non-banking financial companies (NBFCs) have decreased.
On the other hand, deposits have not grown as quickly. By October 3, 2025, total deposits reached ₹241.0 lakh crore, up 9.9% from last year, which is lower than the 12.2% growth seen the previous year. One reason for this slower growth is that banks are offering lower interest rates on deposits, prompting investors to look for other investment options outside the banking system.
In terms of interest rates, the short-term weighted average call rate (WACR), which reflects the cost of borrowing funds between banks, fell to 5.43% as of October 10, 2025, down from 5.57% in the previous fortnight. This is slightly below the repo rate of 5.50%, reflecting the impact of three consecutive cuts in the repo rate by the Reserve Bank of India (RBI) and its efforts to manage liquidity in the banking system. In simple terms, borrowing costs between banks have come down slightly, making funds cheaper for lending.
Bank credit off-take grew 11.4% y-o-y and stands at Rs 192.7 lakh crore in the fortnight ending October 03, 2025, reflecting a sequential rise of 1.9% from the previous fortnight. The increase was primarily driven by higher lending to micro and small enterprises and seasonal demand in the festive season.
As of October 3, 2025, total bank deposits reached ₹241.0 lakh crore, up 9.9% compared to last year and 2.35% higher than the previous fortnight. Even with this increase, deposit growth is still below the 12.2% growth seen at the same time last year. Most deposits, called time deposits, make up 87.2% of the total and grew 8.8% year-on-year to ₹210.3 lakh crore, slower than last year’s 11.6% growth. Demand deposits, which people can withdraw anytime, rose 18.6% compared to last year, higher than last year’s 13.4%, and now total ₹30.7 lakh crore, forming 12.7% of all deposits.
The credit-to-deposit (CD) ratio fell slightly to 79.9%, just below the 80% mark. This happened because banks received more deposits (₹5.53 lakh crore) than the amount of new loans given out (₹3.63 lakh crore) during the same period. The bank credit-to-total-assets ratio rose a little by three basis points to 72.5%, showing that banks are putting a slightly higher portion of their assets into loans. On the other hand, the Government Investment-to-total-assets ratio dropped slightly by two basis points to 25.9%. Total government investments were ₹68.8 lakh crore as of October 3, 2025, up 6.5% from last year and slightly higher by 0.4% compared to the previous fortnight.
What this means for You?
With banks lending more than people are depositing, there are some important effects for you. Interest rates on deposits may stay low, meaning your savings and fixed deposits could earn less than before. At the same time, banks are actively giving out loans, so if you plan to buy a house, car, or take a business loan, you might find competitive rates and easier approvals. Slower deposit growth also suggests that many people are turning to alternative investments like mutual funds or government bonds for better returns. Higher credit growth can increase spending in the economy, which may slightly push prices up, so it’s important to watch your monthly expenses. Additionally, with short-term borrowing costs falling below the repo rate, banks can lend money more cheaply, which could eventually benefit borrowers. In short, savers may see slower growth on their deposits, while borrowers could take advantage of easier and cheaper loans.
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