Deposit surge lifts liquidity The Reserve Bank of India (RBI) highlighted in its September bulletin that bank deposits in August reached their highest level in 15 years. The surge was largely attributed to the special swap window for three‑ and five‑year foreign currency non‑resident (FCNR‑B) deposits, which attracted about **$133 billion** by 31 August, the day the window closed.
Credit‑deposit gap narrows Both credit and deposits continued to grow in September, though at a slightly moderated pace. The incremental credit‑deposit (I‑CD) ratio, which had breached **110 %** in FY2023 and FY2024, showed signs of easing after the deposit jump. Earlier, the scheduled commercial banks’ (SCBs) CD ratio had climbed to **82.2 %** in March 2026, while the I‑CD ratio peaked around **114 %** in May FY2027 before declining.
Liquidity remains ample RBI said system‑wide liquidity stayed in surplus throughout August and rose further in the first half of September as banks tapped the FCNR‑B swap facility. A later dip in liquidity was linked to tax‑related outflows rather than a shortage of funds.
Money supply and credit outlook The rapid rise in aggregate deposits also accelerated money‑supply growth in August. While deposits surged, credit growth stayed broad‑based, buoyed by industrial advances and foreign direct investment (FDI). The total non‑food bank credit portfolio expanded to **Rs 9.84 lakh crore** as of 31 August, compared with **Rs 3.83 lakh crore** in the same period last year.
Historical credit‑deposit dynamics Between September 2021 and March 2026, loans and advances grew by **Rs 102.2** for every **Rs 100** of deposit growth, indicating a widening credit‑deposit gap. The recent deposit mobilisation could therefore give banks a larger pool of domestic funding to sustain further credit expansion.
--- *The RBI’s observations suggest that the influx of FCNR‑B deposits is playing a pivotal role in stabilising liquidity and may support a more balanced credit‑deposit relationship going forward.*