Banks under RBI lens for high credit-deposit ratios

The Reserve Bank of India (RBI) is expected to summon banks with high credit-deposit  ratio (ratio of credit to deposit growth) and ask them to take appropriate action to bring it down in order to prevent credit growth outstripping deposit growth. Banks with incremental credit-deposit ratio in excess of 100 per cent will be the first ones to be summoned. The ratio going above 100 per cent means banks have lent more than they raised in deposits. RBI is worried that banks may be borrowing from the repo window (overnight refinance facility provided by the central bank) and call money market to fuel credit growth. RBI deputy governor Anand Sinha, in charge of banking operations and development, is expected to meet each of these banks. He may ask the banks to curtail credit growth until their deposits catch up.