Group 1 - The banking system liquidity remains in a daily average surplus of ₹2.56 lakh crore in February, easing short-term funding conditions and reducing overnight and money-market borrowing rates [1][7] - Despite the surplus liquidity, there has been no improvement in liquidity coverage ratios (LCR), which have declined across banks due to strong credit growth outpacing deposit accretion [7] - The credit-deposit ratio has reached a record high of 82%, indicating persistent strain on banks' liquidity buffers amid robust loan demand [7] Group 2 - The State Bank of India experienced the sharpest decline in LCR, falling from 144% in Q2 to 125% in Q3, as credit expanded by 15% while deposits grew only 9% [7] - As of February 13, bank credit grew by 14.6% year on year, while deposits increased by 12.5%, according to the latest RBI data [7] - With weak deposit mobilization, banks have increasingly relied on certificates of deposit (CDs) to secure funding, leading to elevated CD rates, which stood at 7.37% as of February 15, up from 6.70% a month prior [5][7]
Banks' liquidity buffers shrink as deposits lag credit growth
The Economic Times·2026-02-24 19:06