Indian Banks' Short-Term Debt Reaches 12-Year High Due to Strong Loan Growth

Tuesday, 23 July 2024, 03:53

Indian banks are facing a significant increase in short-term debt as they turn to certificates of deposit to meet the rising demand for loans while deposits grow sluggishly. The outstanding amount of these deposits rose to 4.3 trillion rupees ($51.4 billion) as of July 12, indicating the highest levels since June 2012. This situation underlines the ongoing challenges in balancing loan growth with deposit accumulation in the banking sector.
Economictimes
Indian Banks' Short-Term Debt Reaches 12-Year High Due to Strong Loan Growth

Overview of the Current Situation

Indian banks are increasingly reliant on short-term borrowing to meet strong loan demand.

Short-Term Borrowing on the Rise

To bridge a growing funding gap, banks have turned to certificates of deposit.

Record Levels Observed

  • Outstanding certificates surged to 4.3 trillion rupees ($51.4 billion)
  • Highest levels since June 2012

Conclusion

This trend highlights the challenges faced by Indian banks in managing liquidity amidst increased loan demands.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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