Liabilities, where the money comes from:
- Deposits are the franchise. They split three ways: current accounts (CA, 0% cost, the float businesses keep), savings accounts (SA, ~2.5 to 3.5%) and term deposits (~6.5 to 7.5%). CA + SA = CASA (KPI 9). Beyond the mix, watch granularity. A million ₹2-lakh depositors are sticky and insured. Twenty corporate treasuries holding ₹500 cr each are a flight risk. Banks disclose their top-20 depositor concentration, so read it. SVB makes the point in blood.
- Borrowings are interbank money and RBI refinance, plus bonds. They're fine as seasoning and dangerous as a diet, because borrowed money is sensitive to rates and to confidence.
- Capital is equity plus hybrid instruments. Regulation sorts it into layers. CET1, common equity Tier 1, is share capital plus reserves, the truest loss absorber. AT1 is perpetual bonds that convert or write down under stress, and Yes Bank's AT1 holders found out that "write down" isn't a metaphor. Then there's Tier 2. The ratios are KPI 11.
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What are the assets of a bank?
Assets, where the money goes:
- Cash and CRR. Banks have to park the Cash Reserve Ratio with the RBI. It's ~3 to 4% of net demand and time liabilities, and it earns nothing. Since the number moves with policy, pull the live figure from the RBI.
- The investment book is mainly G-secs held to meet the Statutory Liquidity Ratio (SLR, ~18% of NDTL, but check the current figure), plus corporate bonds. Since April 2024 the RBI has classified investments as HTM / AFS / FVTPL, an IFRS-9-style regime. HTM is carried at amortised cost, AFS is marked to market through a reserve in equity, and FVTPL through the P&L. Remember the SVB lesson, that amortised cost hides, it does not protect. A 6-year bond loses ~6% of its value for every 100 bp rise in rates, even if the accounting never shows it.
- Advances, the loan book, are the product. Read the mix (retail/corporate/SME, secured/unsecured), the yield and the concentration disclosures for top-20 borrowers and sector exposures. India adds a regulatory overlay. Priority sector lending (PSL) requires 40% of adjusted net bank credit to go to agriculture, micro-enterprises and other mandated sectors, with sub-targets. Banks short of the target buy PSL certificates or park money in low-yield RIDF deposits, which is a real drag on NIM for wholesale-heavy banks.
What is the CD ratio?
The link between the two sides is the CD ratio (credit-to-deposit, KPI 10), which is loans as a percentage of deposits. India's structural comfort zone is ~75 to 85%, because the rest of the deposit base is already committed to CRR and SLR. A bank lending at CD > 90% is funding loans from borrowings or running down its liquidity. Its growth has outrun its franchise. Yes Bank crossed 100%. Mark that threshold in red ink.