Credit-to-Deposit Ratio Remains Below 80%: CareEdge Ratings

Context:

According to CareEdge Ratings, the credit-to-deposit (CD) ratio in Indian banks remains below 80% as credit offtake continues to lag deposit growth.

Credit-to-Deposit (CD) Ratio

• The Credit-to-Deposit (CD) Ratio shows the proportion of a bank’s deposits that have been lent out as credit.
• Formula:

Purpose / Importance

• Measures how efficiently a bank is using its deposits.
• Indicates the health and liquidity of the banking system.
• Used by RBI as a key financial stability indicator.

TOI