By Gayatri Nayak/ Saikat Das
MUMBAI: Lending and deposit rates may rise further as a vital indicator of the resources and lending in the banking system is at a life-time high, dashing hopes of loan repayment pressure easing anytime soon.
The credit-to-deposits ratio rose to a life high of 78.52%, indicating that banks are borrowing from the market to lend rather than from lower-cost deposits to lend for projects and working capital. For every Rs 100 of deposits, banks are lending as much as Rs 78.5. If the reserve requirements such as the statutory liquidity ratio of 23% and cash reserve ratio of 4% are factored in, the credit to deposits ratio should not cross 73%.