Indian Banks' Loan Ratios to Strengthen Post-Q1

25 Sep 2024 , 11:31 AM

S&P Global Market Intelligence predicts that Indian banks’ loan-to-deposit ratios will improve after the majority of them reported rises in the April-June quarter.

In a sample of 32 publicly traded Indian banks, 26 lenders’ loan-to-deposit ratios (LDRs) grew year on year during the fiscal first quarter ending June 30.

The LDR measures a bank’s liquidity by comparing total loans to total deposits; a high LDR indicates possible liquidity difficulties.

According to central bank data released on August 3, aggregate deposit growth at Indian banks slowed to 11.7% in the three months to June, down from 13.1% the previous quarter, and outstanding loan growth fell to 15% from 15.6%.

Shaktikanta Das, Governor of the Reserve Bank of India, recently stated that high LDRs are not a cause for concern until deposits continue to trail loan growth.

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