Incremental CD ratio moderates to 77.7%, lowest in nearly 30 months

The incremental credit-deposit (CD) ratio has moderated to 77.7%, the lowest in nearly 30 months, indicating a slowdown in credit growth relative to deposit accumulation. The CD ratio measures the proportion of deposits that banks lend out as credit. A lower ratio suggests that banks are holding more deposits as reserves rather than extending them as loans. This trend reflects cautious lending practices amid economic uncertainties and regulatory measures aimed at maintaining financial stability. The moderation in the CD ratio is also influenced by the increase in deposit rates, which has attracted more savings into the banking system. The slowdown in credit growth poses challenges for economic recovery, as it may limit the availability of funds for businesses and consumers. Policymakers and financial institutions are closely monitoring the CD ratio to ensure a balanced approach to credit expansion and deposit mobilization.