The Indian Banking Sector has witnessed a sharp post-pandemic revival, marked by accelerated credit growth, expanding balance sheets, and rising financial intermediation, according to the latest SBI Research – Indian Banking Sector: A Trend Analysis report.
Bank assets rebounded from 77% of GDP in FY21 to 94% by FY25, reflecting renewed lending momentum and deeper financial penetration across the economy.
Indian Banking Sector Sees Rapid Expansion in Deposits and Advances
The SBI Research report highlights that deposits in the Indian Banking Sector surged from ₹18.4 lakh crore in FY05 to ₹241.5 lakh crore in FY25, while advances expanded from ₹11.5 lakh crore to ₹191.2 lakh crore during the same period.
Notably, the pace of advance growth has been significantly faster than deposit accretion, pushing the Credit-Deposit (C-D) ratio from 69% in FY21 to 79% in FY25, indicating robust credit demand.
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Indian Banking Sector Credit-Deposit Ratio Reaches Multi-Year High
The report notes that India’s C-D ratio has been on a steady upward trajectory since 2000–01, rising from 53% to over 82% as of December 15, 2025.
Incremental C-D ratios crossed 100% in multiple years, reflecting sustained credit demand despite relatively slower deposit growth, with banks increasingly tapping alternate funding sources to meet lending requirements.
Public Sector Banks Regain Ground in the Indian Banking Sector
Public Sector Banks (PSBs) have begun reclaiming their market share in advances after a prolonged decline since FY08. SBI Research attributes this trend to balance sheet repair, improved capital adequacy, and renewed lending appetite.
Between FY21 and FY25, the Capital to Risk-Weighted Assets Ratio (CRAR) improved across most PSBs, strengthening their financial resilience.
CASA Stability Masks Divergent Trends Within the Indian Banking Sector
While the overall Current Account Savings Account (CASA) ratio for Scheduled Commercial Banks remained stable at around 37%, private sector banks improved their CASA share, whereas foreign banks experienced erosion.
This divergence underscores varying deposit mobilization strategies across bank groups within the Indian Banking Sector.
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Rising Unsecured Lending Raises Risk Sensitivity in the Indian Banking Sector
Unsecured advances increased sharply from ₹2 lakh crore in FY05 to ₹46.9 lakh crore in FY25, accounting for 24.5% of total lending.
PSBs and private banks together account for the bulk of this exposure, highlighting rising credit risk sensitivity amid expanding retail and unsecured loan portfolios.
Regional Disparities Persist Across the Indian Banking Sector
SBI Research points to persistent regional imbalances in credit deployment. Southern, Western, and Northern regions continue to record higher C-D ratios, while Eastern and North-Eastern regions lag, with several large states such as Bihar, Odisha, Jharkhand, and West Bengal recording C-D ratios below 52%.
District-level analysis further reveals high concentration, with the top 10 districts accounting for 43% of deposits and 49% of credit.
Financialization of Savings Reshapes the Indian Banking Sector
The report observes a growing shift of household savings from bank deposits to financial markets between FY20 and FY25.
States such as Gujarat, West Bengal, Madhya Pradesh, Andhra Pradesh, and Karnataka have witnessed faster growth in investor participation relative to deposit growth, indicating increased financialization of household savings within the Indian Banking Sector ecosystem.
