India’s credit deposit ratio, which has been increasing continuously, has hit a high of 81.75% on 31 December 2025, underscoring greater demand for credit among consumers.

This ratio indicates the percentage of deposits with banks that are disbursed as loans. In other words, if a bank has total deposits of ₹100 and it issues ₹80 towards loans, the credit deposit ratio would be 80%.

SBI Research Report noted that India’s credit-deposit (CD) ratio has been increasing continuously since 2000-01 from 53% to 82% as of 15 Dec 2025. The ratio has risen from 69% in FY21 to 79% in FY25, the report further notes.

Is this worrisome?

Although banks’ higher propensity to lend is a good thing from the point of view of economic growth. but too high credit-deposit ratio may not be sustainable. Notably, there have been instances when this ratio has hit even higher. “Since 1950-51, there have been 8 instances (FYs) when the incremental CD ratio has crossed 100%, and in 2005-06, it touched 99%,” reads the report.

Experts point out that the reasons responsible for the spike in this ratio are policy rate cuts, improved consumer sentiment, and festive-season demand.

Kundan Shahi, Founder, Zavo, says, “India’s banking system is witnessing a sharp acceleration in credit growth, reflecting robust borrowing demand across consumer and business segments. The sector’s credit-to-deposit (CD) ratio rose to a record 81.75% as of December 31, 2025, indicating that banks are lending nearly ₹82 for every ₹100 deposited. The surge has been driven by policy rate cuts, improved consumer sentiment, and festive-season demand, with housing, auto, and retail loans leading growth. Despite the rapid expansion, asset quality has remained resilient, with gross non-performing assets hovering near multi-decade lows at around 2.1% as of September 2025, underscoring healthier credit books.”

“However, the elevated CD ratio also points to tightening liquidity conditions. With loan growth outpacing deposit mobilisation, the RBI has urged banks to maintain additional cash buffers. Analysts caution that sustained imbalance could prompt lenders to raise deposit rates or moderate credit growth, potentially pressuring margins,” he says.

Overall, the trend reflects a credit-hungry economy supporting near-term growth, while reinforcing the need for prudent liquidity management to safeguard long-term stability.

Another expert points out that a high credit-deposit ratio is a healthy signal and would not lead to higher delinquencies since credit expansion is supported by genuine demand in a growing economy.

Joydip Gupta, APAC Head at Scienaptic AI, says, “A credit–deposit ratio of 81.75% at the system level is largely a healthy signal, as it reflects strong credit demand and underlying economic momentum. On its own, this does not suggest stress, but it does indicate that credit growth is running ahead of deposit mobilisation, which could tighten liquidity and increase funding costs for some banks. The larger risk is not the ratio itself, but asset–liability tenure mismatches and any dilution in underwriting discipline. Higher delinquencies tend to emerge only when growth is driven by riskier lending, not when credit expansion is supported by genuine demand in a growing economy.”