The report states that banks prefer IDFC First And bond Has outpaced its larger peers in deposit growth year-on-year, allowing them to improve their Current and Savings Account (CASA) deposit ratios and for deposits to grow as demand for longer term loans increases. Competition may increase. capex Raise.
“With better visibility due to continued thrust on cutting-edge service and franchise building, mid-sized private banks may become more prominent in metros and tier 1 cities. Thus, competition in deposit accretion will continue, and may subsequently increase. In case the demand for credit increases for long term capex,” Ind-Ra said.
Although the term of all banks has been extended deposit rates In the last six to eight months, there has been a sharp increase in deposit rates by medium-sized private sector banks. “Some banks were offering higher rates on a sustained basis even during the pandemic when the banking system was flooded with excess liquidity. This has helped them attract new retail depositors. Ind-Ra believes that digital The thrust on infrastructure creation is playing a meaningful role in attracting the urban-metro population as depositors,” the rating agency said.
Ind-Ra expects loan growth to continue to drive deposit growth in the remaining part of FY23. However, the gap between credit and deposits is likely to narrow in FY24, driven by moderation in credit demand and a possible improvement in the balance of payments account.
“Hence, deposit growth will continue, and scheduled commercial banks” Reliance After this, bulk deposits and borrowings will increase. Further, given the largely short-term nature of credit demand, banks will continue to use one- to three-year buckets,” Ind-Ra said.
The rating agency expects banks eager to raise bulk deposits in buckets of one to three years by offering them attractive rates – imposing a material difference between rates for the wholesale depositor versus the retail depositor.
“The current nature of credit growth is largely driven by short-term working capital funding and the shift from capital markets to the banking system. With credit demand still low due to capex, banks will focus more on short-term deposits;” Ind-Ra said.