CRISIL estimates bank credit in India would grow at a pacy ~13-14% on average between fiscals 2019 and 2020, significantly faster compared with the 8% seen in fiscal 2018, which would force a change in the deposit mobilisation plans of banks over the medium term.
To meet this credit growth, banks will have to raise about Rs 25 lakh crore over the two fiscals. While Rs 5-6 lakh crore is expected to become available through the release of statutory liquidity ratio (SLR) funds, ~Rs 20 lakh crore would need to be raised through fresh deposits.
That would be well above the average annual deposit mobilisation of ~Rs 7 lakh crore over the past few years. It would also put upward pressure on the interest rates bank offer on deposits.
Traditionally, banks have utilised their excess SLR in the initial period of credit revival. They would do that this time around, too. That said, bulk of the credit demand would be met by deposit growth and to a minor extent by other resource raising options like infrastructure bonds.