Deposit franchise

A bank's ability to gather low-cost, sticky deposits, which is the durable competitive advantage in lending.

A bank with ₹22,000 crore of current and savings balances in ₹55,000 crore of deposits has 40% of its funding at little or no cost.

The franchise is built over decades through branches, salary accounts, payment relationships and trust, and it cannot be bought quickly at any price. That is precisely why it is a moat: a competitor can match any loan product within a quarter and cannot match the funding cost for a decade.

Everything else about a bank can change. This is the part that persists.