The rupee, in lockstep with smart gains in forex reserves, advanced more than 2.5% from its lows late May, closing at 94.49 to the dollar Friday-the highest in nearly two months. The forex kitty swelled $11.48 billion in the week to August 28, the latest weekly data published Friday by the Reserve Bank of India (RBI) showed. The RBI has used a part of its forex arsenal to defend the rupee and prevent imported inflation, after the local unit touched a lifetime low of 96.96 to a dollar on May 20.
Lending Headroom
“PSU banks have seen a rise in LCR…which means they have a couple of more quarters of breathing space to further increase LDR before deposit growth structurally brings down loan growth,” said Suresh Ganapathy, managing director, Macquarie Capital.
“Even now SBI is sitting on LCR way higher than larger private sector peers. That alone gives another edge of 300-400 bps rise in LDR that SBI can achieve without any issues on LCR as per our calculations,” Ganapathy said in a report.
The cushion comes at a time when deposit mobilisation at state-owned lenders is trailing private banks. Private banks widened their deposit-growth advantage over PSBs to around four percentage points in the June quarter and continued to gain deposit market share. PSBs have increasingly relied on borrowings to supplement deposits and support credit expansion.
Loan growth has also continued to outpace deposits, pushing the aggregate loan-to-deposit ratio of PSBs to 81.3% in Q1FY27 from 77% a year earlier. Private banks operated at a significantly higher LDR of 90.5%.
The revised LCR framework, effective April, benefited PSBs somewhat more because of their deposit mix, including their lower share of internet and mobile banking-enabled deposits.
m.economictimes.com