Credit-deposit ratio

Loans divided by deposits. A measure of how far a bank has lent out the money it has taken in.

A bank with ₹42,000 crore of advances and ₹55,000 crore of deposits runs at 76.4%.

Above 90% the bank is funding loan growth from borrowings rather than deposits, which is more expensive and less stable. Indian banks have run into this constraint in periods when credit growth outpaced deposit growth for several consecutive quarters, and the response is either slower lending or a deposit rate war.

The ratio is a growth constraint dressed as a liquidity measure.