Bank Deposits Rise By Rs 7 Lakh Crore As Credit Growth Hits Two-Year High
Commercial banks recorded a surge of over Rs 7 lakh crore in deposits during the fortnight ending June 30, 2026, driven by foreign currency inflows, according to a CareEdge report released in Chennai. This influx helped push bank credit offtake to a two-year high, with outstanding bank credit rising 18.6 percent year-on-year to Rs 219.3 lakh crore, reflecting resilient demand across retail and MSME sectors.
Aggregate deposits rose to Rs 265.4 lakh crore, representing a 13.3 percent year-on-year growth compared to 10.1 percent in the same period last year. On a sequential basis, deposits grew by 2.7 percent, outpacing credit growth during the fortnight.
This growth was supported by sustained deposit mobilisation by banks and improved funding conditions. These conditions were aided by recent Reserve Bank of India (RBI) liquidity and foreign currency funding measures, including Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, external commercial borrowings (ECBs), and overseas foreign currency borrowings (OFCBs).
Outstanding bank credit rose to Rs 219.3 lakh crore as of June 30, 2026. This 18.6 percent year-on-year growth was significantly higher than the 9.5 percent growth recorded in the corresponding period in 2025. Sequentially, credit expanded by 1.8 percent during the fortnight.
CareEdge attributed the credit expansion to resilient demand in the retail and Micro, Small and Medium Enterprises (MSME) segments, continuous lending to Non-Banking Financial Companies (NBFCs), and a gradual improvement in corporate credit.
A portion of the credit increase was linked to disbursements under the government's Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. Since its launch in May, the government has issued more than 140,000 guarantees worth over Rs 1.55 lakh crore under this scheme. Lower policy rates and surplus liquidity conditions also supported borrowing appetite.
Consequently, the Loan-to-Deposit Ratio (LDR) stood at 82.6 percent, up from 78.9 percent in June 2025. CareEdge expects deposit growth to remain healthy despite competition from market-linked investments. Recent RBI measures, alongside forex swap facilities, are projected to improve banks' funding flexibility and support liquidity in the coming quarters.
