Banks benefit tremendously from interest rate hike, deposit growth reaches highest level in many years

With the increase in the interest rate, the deposit growth of banks is also increasing and it has reached the highest level of six years with 13.5 percent till 11 August. This information was given in a report.

Care Edge Ratings said this is the first time since 2017 that deposit growth has touched the 12.5 percent mark. Deposit growth was half of credit growth in the last few months and deposit growth has picked up with many banks raising interest rates.

Credit growth has reached 19.7 percent after the merger of HDFC and HDFC Bank. It was told in the report that if this merger had not happened, it would not have been more than 14.8 percent.

The merger of HDFC and HDFC Bank was the biggest merger in the corporate history of the country. Its size was more than 40 billion dollars. However, the impact of the merger on deposit growth was limited.

The report further pointed out that had it not been for the subsequent merger of HDFC and HDFC Bank, the deposit growth would have been at 12.8 percent, as HDFC Ltd does not accept deposits.

The withdrawal of Rs 2000 denomination notes has also helped in increasing the deposit growth of banks. Due to this, the deposit growth rate has reached the highest level in many years.

The report said that the trend regarding bank credit will also be positive. The personal loan segment is likely to perform best in FY24. However, interest rates will remain high due to global volatility and tight credit policy by central banks.