Tamil Nadu: Foreign Currency Inflows Help Bank Deposit Accretion Of Rs 7 Lakh Cr In Last Fortnight
CHENNAI: Foreign currency inflows through FCNR(B) deposits, external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs) led to accretions of over Rs 7 lakh crore in bank deposits in the fortnight ending June 30. This also helped bank credit offtake hit a two-year high.
Aggregate deposits rose to Rs 265.4 lakh crore, with accretions over Rs 7 lakh crore, recording 13.3% yo-y growth compared with 10.1% a year earlier. Sequentially, deposits increased by 2.7%, outpacing credit growth during the fortnight, reflecting sustained deposit mobilisation by banks and improving funding conditions, aided in part by recent RBI liquidity and foreign currency funding measures, through FCNR(B) deposits, external commercial borrowings (ECBs) and overseas foreign currency borrowings (OFCBs), according to CareEdge.
Outstanding bank credit increased to Rs 219.3 lakh crore as of June 30, 2026, registering a robust growth of 18.6% y-o-y, significantly higher than 9.5% in the corresponding period last year. On a sequential basis, credit expanded by 1.8% during the fortnight, supported by resilient demand across retail and MSME segments, continued lending to NBFCs and a gradual improvement in corporate credit.
A portion of the increase could have come from disbursements under the government’s ECLGS 5.0 scheme, which has seen traction. The government has issued more than 140,000 guarantees worth over Rs 1.55 lakh crore under ECLGS 5.0 since its launch in May. Further lower policy rates and surplus liquidity conditions also aided borrowing appetite.
Consequently, the Loan-to-Deposit Ratio (LDR) stood at 82.6% against 78.9 per cent in June 2025.
Going forward, deposit growth is expected to remain healthy despite competition from market-linked investment avenues. Recent RBI measures to facilitate foreign currency funding, together with the forex swap facility for eligible borrowings, are likely to improve banks’ funding flexibility and support liquidity conditions over the coming quarters.
The LDR is likely to remain elevated in the near term as credit demand continues to stay healthy. However, deposit growth is expected to improve, systemic liquidity conditions to ease, and credit growth to gradually moderate over the coming quarters.
