Shifting Gears: PSBs borrow more to cater to credit demand as deposits lag

Public sector banks are borrowing more money to meet the growing demand for credit from customers, but they are struggling to keep up with this demand due to a lag in deposit growth. This trend is concerning because it raises questions about whether these banks can sustain their lending activities in the long term. The fact that private banks are experiencing stronger deposit growth and gaining market share adds to the pressure on state-owned lenders.

Why it matters

Public sector banks are borrowing more to fund lending expansion, which could lead to increased credit growth. However, this also indicates that deposits are not keeping pace with credit growth, which could be a concern for the banks' liquidity.

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