India’s high credit-deposit ratio: Is the banking system overstretched or just efficient?

The credit-deposit (CD) ratio of scheduled commercial banks reached 81.75%—the highest level recorded since 2000-01—on 31 December 2025. Usually, a high CD ratio is a positive indicator as it means that banks are deploying funds efficiently in loans. CD ratios rise when credit is booming, and economic activity is picking up. Yet, in the past, the Reserve Bank of India (RBI) has warned banks about excessively high CD ratios, though it does not recommend an ideal level. Are CD ratios too high, and why does it ...