February 8, 2021 (MLN): The total deposits held by Commercial Banks have shown a robust growth of 16% YoY to Rs 17.1 trillion in January 2021.
While, on monthly basis, commercial banks’ deposits showed a decline of 4% MoM.
The YoY increase in deposits can be attributed to higher Remittances which reached an unprecedented level of $14.2 billion, marking a growth of 24.9% YoY during 1HFY21, while lack of cash-based business activity due to COVID-19 may have also resulted in an increase in bank deposits.
Meanwhile, fresh deposits that were utilized in expanding the Investment portfolio have grown by 37% YoY and fell by 1% MoM to Rs.11.42 trillion in Jan’21.
Consequently, banks' investment to deposit ratio (IDR) remained at 67% as in the previous month. To recall this was 57% in Jan’20.
On the other hand, the demand for fresh disbursements remained muted despite lower interest rates as it grew by just 4% in the first month of CY21 as banks remained wary of overall economic conditions due to COVID-19. This has resulted in a drop in advances to deposits ratio (ADR) to 50% from 56% in January 2020.
