
Credit growth for most banks remained strong in the last quarter of FY24, with a steady growth rate of 15-25 percent, according to the provisional quarter-end numbers reported by lenders.
A positive trend was the increase in the pace of deposit growth, which helped address concerns about stretched loan-to-deposit ratios and loan growth outpacing deposit growth. While year-over-year deposit growth was largely in line with credit growth at 14-26 percent, sequential growth was higher at 4-15 percent compared to 1-8 percent in the previous quarter.

In terms of credit growth, the sequential growth for Q4 was 3-11 percent, compared to 2-8 percent in the previous quarter. Lenders typically experience accelerated loan and deposit growth in the final quarter of a financial year due to higher fund requirements.
Non-Banking Financial Companies (NBFCs) like M&M Financial Services and Poonawalla Fincorp also reported strong credit growth for the quarter. M&M Financial Services saw a 24 percent year-on-year increase in assets under management, while Poonawalla Fincorp witnessed a 54 percent year-on-year rise and a 13 percent quarter-on-quarter increase. L&T Finance reported a 31 percent year-on-year growth in retail loans, with quarterly disbursements seeing a 33 percent increase.
Credit growth for banks varied, with South Indian Bank and YES Bank experiencing growth at the lower end, ranging from 11-14 percent. On the other hand, RBL Bank, Federal Bank, and AU Small Finance Bank witnessed higher growth rates, ranging from 19-25 percent.
HDFC Bank recorded the highest loan growth of 55.4 percent year-on-year, primarily due to the merger of HDFC with HDFC Bank in July 2023. Sequentially, credit growth was 1.6 percent higher. The bank also saw a 26.4 percent year-on-year increase in deposits and a 7.5 percent increase quarter-on-quarter.
Macquarie Research highlighted the strong performance of HDFC Bank, stating that 77 percent of the ₹1.7 lakh crore deposits mobilized were retail deposits. They deemed this outcome excellent given the current liquidity environment. Additionally, the bank’s Current Account Savings Account (CASA) growth of 8.8 percent quarter-on-quarter was considered exceptionally strong. Macquarie Research expects HDFC Bank to have a 15 percent incremental deposit market share in FY24.
Other banks, such as RBL Bank, Bandhan Bank, and Yes Bank, also experienced accelerated deposit growth. Small finance banks witnessed high growth rates ranging from 24-50 percent, which can be attributed to their efforts to attract retail deposits during the quarter through higher interest rates on specific tenure savings accounts and fixed deposits.
However, for banks like South Indian Bank and IndusInd Bank, deposit growth was lower at 11-14 percent, aligning with their loan growth trends. Most banks saw sequential increases in CASA ratios, but year-on-year ratios fell as expected.