Summary of this article
Bank credit growth remained steady at 17.7 per cent in June.
Deposit growth slowed to 12 per cent amid investment preference shift.
RBI measures aim to boost foreign currency deposit inflows.
Bank credit growth for the fortnight ended June 15, 2026 held steady at 17.70 per cent, according to the latest data released by the Reserve Bank of India (RBI). This was unchanged from the previous fortnight, indicating continued demand for loans across sectors.
Deposit growth, however, eased to 12 per cent during the same period from 12.20 per cent recorded in the previous fortnight. Despite the slight moderation, both credit and deposit growth remained stronger than the levels recorded a year ago.
In the corresponding period last year, bank credit had grown by 9.60 per cent, while deposits had increased by 10.40 per cent.
Deposits Slow As Savers Explore Market-Linked Investments
The drop in deposits was driven by a change in retail savers’ investment preferences. Many individuals have been shifting a portion of their savings from traditional bank savings into other market-linked products, due to the potential for increased returns from equity markets.
The trend has made deposit mobilisation more difficult for banks, despite healthy demand for credit. A higher pace of lending compared to deposit growth can put pressure on banks to raise additional funds to support loan expansion.
Even with the recent moderation, deposit growth continues to remain higher than the level seen during the same period last year.
Banks Expect Support From NRI Deposits
Banks expect deposit mobilisation to improve in the coming months, supported by inflows from non-resident Indians through foreign currency non-resident bank (FCNR-B) deposits.
To attract these deposits, banks have increased deposit rates on FCNR-B accounts by as much as 450 basis points. The move followed the RBI's announcement on June 5, 2026 of a concessional swap facility aimed at encouraging foreign currency inflows into the banking system.
The RBI also removed the ceiling on interest rates that banks can offer on FCNR-B and non-resident external (NRE) deposits. This has given banks greater flexibility to offer more competitive returns to overseas depositors and strengthen their foreign currency deposit base.
The policy changes are expected to help banks attract additional overseas funds at a time when domestic deposit growth has shown signs of easing, while demand for credit continues to remain strong.
