HDFC Bank's credit-deposit ratio has climbed to 99.5%, meaning the lender deploys nearly ₹99.5 of every ₹100 in deposits. Credit growth of 11.9% is outpacing deposit growth of 11.5%, widening the gap between what flows in and what flows out.
A C/D ratio this tight leaves little room for unexpected withdrawals or market shocks. Banks typically maintain buffers to meet regulatory requirements and fund day-to-day operations without fire-selling assets or tapping emergency liquidity windows.
The squeeze is already visible in bank behaviour: HDFC and peers are raising fixed deposit rates to attract retail savings and shore up the liability side. Aggressive FD offers have become the norm as banks compete for deposits.
Lending standards are also tightening. When liquidity is scarce, banks become more selective about loan approvals, tightening underwriting criteria and favouring lower-risk borrowers. This directly affects DSAs and loan agents downstream.
HDFC's situation reflects a sector-wide shift, not an isolated problem. Across major banks, deposit growth has lagged credit growth, pushing the system into a liquidity-constrained phase that could persist if credit demand remains robust.
