Bank credit, deposit growth slows in third quarter, RBI says

Mumbai: Bank credit and deposit growth experienced a slowdown during the October-December quarter sequentially, according to Reserve Bank data released on Friday.

Bank credit growth (year over year) decelerated to 11.8 per cent in December 2024 from 12.6 per cent in September 2024, while aggregate deposits increased at a marginally lower pace at 11 per cent as compared to 11.7 per cent growth in the July-September period.

Personal loans, which have a large share (31.5 per cent) in the total credit, recorded moderation in annual growth to 13.7 per cent (15.2 per cent a quarter ago).

Credit to agriculture and industry sectors also recorded some tempering in the growth. On the other hand, bank lending for trade, finance and professional/ other services accelerated during the third quarter of 2024-25. 

Meanwhile, term deposits rose by 14.3 per cent (year over year) as compared to 5.1 per cent growth in saving deposits in December 2024, the RBI data showed. As a result, the share of term deposits in total deposits rose to 62.1 per cent from 60.3 per cent a year ago.

A term deposit is a type of investment provided by banks and other financial institutions where a fixed sum of money is deposited for a specific period, known as the term. Term deposits offer higher interest rates than traditional savings accounts, while early withdrawal will incur a penalty. 

RBI further said the share of deposits bearing seven per cent or above interest rate in total term deposits increased to 70.8 per cent in December 2024 from 61.4 per cent a year ago.

During April-December 2024, 56.1 per cent of the total term deposits were of size 'Rs 1 crore and above'. Senior citizens owned 20.2 per cent of the total deposits in December 2024.