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NEW DELHI: Indian banks are expected to register improvement in their loan-to-deposit ratios, as most of the lenders reported increases during the April-June quarter.
The largest private lender, HDFC Bank, witnessed the most increase, with its loan-to-deposit ratio surging from 87.91 per cent a year ago to 107.26 per cent in the quarter, according to data compiled by S&P Global Market Intelligence, a financial information and analytics firm.
Additionally, State Bank of India reported a ratio of 77.33 per cent in the first quarter from 72.21 per cent a year ago.
The issue of loan-to-deposit ratio imbalance and its potential risks to financial stability has recently been raised by both the finance minister and the RBI governor.
Customers are now exploring high-yielding investment assets, such as stock markets and mutual funds for better returns who earlier used to keep their hard-earned savings in banks.
Union finance Nirmala Sitharaman also urged state-run banks to increase deposit mobilization via attractive offers, particularly focusing on Tier-2 and Tier-3 cities.
The minister during her meeting with heads of public sector banks last month, suggested that although credit growth has picked up, the increase in deposits could be improved to fund the credit growth sustainably.
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