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FNCR Flows Mask Banks' Deposit Woes
An analysis of 10 banks found average deposit growth of 21.1% year-on-year during July–September, but estimated growth fell to 12.2% after excluding inflows from the Reserve Bank of India's special foreign-currency swap window. Credit growth also fell from 24.2% to an estimated 18.9% when related loans were excluded.
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What happened
An analysis of 10 banks found average deposit growth of 21.1% year-on-year during July–September, but estimated growth fell to 12.2% after excluding inflows from the Reserve Bank of India’s special foreign-currency swap window. Credit growth also fell from 24.2% to an estimated 18.9% when related loans were excluded.
Confirmed
Global impact / market context
The gap indicates that headline deposit growth was boosted by temporary foreign-currency inflows, while domestic deposit gathering remained weaker. If banks cannot attract more deposits, they may have less cash available to support lending, potentially constraining loan growth or increasing pressure to compete for funding.
Analyst inference
The article reports that credit growth also looks lower after removing loans linked to the special window, and says low-cost current and savings account deposits are lagging overall deposit growth. This points to weaker underlying funding conditions than headline growth rates suggest.
Confirmed
What to watch
- Whether domestic deposit growth improves in later reporting periods, especially after the special foreign-currency swap inflows no longer lift the headline comparison. Analyst inference
- Whether banks’ reported credit growth continues to exceed deposit growth, since that gap can increase the need to attract funding or moderate lending. Analyst inference
- Whether growth in current and savings account deposits catches up with total deposits, as the article identifies these lower-cost balances as lagging. Analyst inference
Evidence
- Original source link unavailable