Private banks saw stronger deposit growth (14.3%) than public sector lenders (10.7%) in the June quarter. However, public sector banks achieved faster credit expansion (16.4% vs 15.9%), raising concerns about their funding sustainability.
India's government and RBI introduced measures to attract foreign portfolio investors and non-resident funds into government bonds and bank deposits, including tax exemptions and risk mitigation strategies, leading to a significant rupee gain.
IDFC First Bank's deposit growth slowed to 17% YoY in Q4 from its usual 20%+ rate, as the bank deliberately cut deposit rates from 7% to 6.5%. CEO V Vaidyanathan says the slowdown was planned and is already reversing, with April showing strong deposit momentum. The bank aims to return to 20% annual deposit growth in FY27, while maintaining strong operating leverage with opex growing at 12.5% versus 19% balance sheet expansion. Credit costs improved to 1.65% in Q4, with expectations of further improvement in FY27.
