MUMBAI: With its credit-deposit (CD) ratio surpassing the critical 100 per cent following the merger with HDFC Ltd, HDFC Bank is making concerted efforts to enhance deposit mobilization – a crucial move to regularise its CD ratio and sustain growth.
As part of this strategy, the private sector major on Friday announced the launch of its ‘Pragati’ savings account, targeting people in semi-urban and rural (SURU) areas across India.
The bank said with 51 per cent of its branches located in semi-urban and rural areas, HDFC Bank is committed to supporting rural economies and driving financial inclusion.
“The Pragati Savings Account aims to build a comprehensive banking ecosystem for India’s agricultural sector, including farmers engaged in traditional agriculture, cattle breeding, fisheries, poultry, and dairy farming, as well as self-employed individuals, rural residents, self-help groups, and cooperatives,” the lender said in a statement.
High CD ratio
“HDFC Bank’s elevated CD ratio post-merger has been a matter of concern, as a high ratio indicates that the bank is lending more than it collects in deposits, which can limit future credit growth,” a banking analyst told businessbenchmark.news.
Initiatives like the Pragati savings account are expected to address this issue by expanding the deposit base, particularly in underbanked rural regions. The move aligns with the bank’s larger strategy to fortify its rural banking portfolio while fostering financial inclusion.
By providing targeted banking solutions to rural and semi-urban populations, HDFC Bank seeks to bridge the financial divide and strengthen its position as a key player in India’s agricultural and rural banking landscape.
HDFC Bank is said to nurse plans to increase its branch presence in Kerala, which is known to be a good deposit market with several of its people being NRIs working abroad. Most of the Kerala-based banks have a large deposit book in Kerala compared with their loan book.
That is the reason why all Kerala-based banks carry a low credit-deposit ratio (CD ratio) within the state and this has in fact prompted RBI to call upon these banks to improve their CD ratio within the state.
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