Indian Banks may have to decrease loan growth because deposits are less says S&P Global Ratings

Loan Growth: The position of Indian banks remains strong. There has been a lot of improvement in the credit growth, profits and asset quality of banks. However, deposits in banks are not increasing at that pace. In such a situation, banks will have to slow down the rate of giving loans in future. S&P Global Ratings has described the decline in deposits as worrying. Generally, loan growth is higher in private sector banks. Loan growth of private banks is around 17-18 percent. In comparison, the loan growth of public sector banks has remained at 12 to 14 percent.

Higher credit growth in banking sector

Nikita Anand, Director of Global Ratings Agency, said that credit growth in the banking sector could be around 14 percent in the financial year 2025. It was 16 percent in the financial year. But, the growth of deposits is about 2 to 3 percent less than the loan growth. In such a situation, we expect that banks will give less number of loans in the current financial year. If deposits do not increase, it will have a negative impact on the profits of banks.

Banks should focus on increasing deposit growth

According to the Business Standard report, he said that Indian banks can easily achieve 15 to 20 percent loan growth. For this they will not even need to raise capital. But, it should come at par with the deposit. India's economy is becoming stronger. Banking sector is going to play an important role in this. For this, they should pay more attention to increasing deposits.

Credit growth is running at 1.5 times GDP

Nikita Anand said that loan growth remains about 1.5 times the GDP growth, while deposit growth is running equal to the GDP. Loan growth in the country will have to be brought at par with deposit growth. Banks will have to stop loan growth from increasing too much. If credit growth does not slow down, then banks will have to arrange funds from other sources, which will not be good for them.

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