Robust Deposit Inflows and Credit Expansion Mark September 2025 Banking Landscape
With 121 scheduled commercial banks and 75 co-operatives (24 state, 51 urban), the system channels ₹97k Cr food credit, aiding agri-stability. Provisional data flags minor revisions ahead.
MUMBAI (India CSR): In a testament to the Indian banking system’s enduring strength, the Reserve Bank of India (RBI) on 18 September released its fortnightly Scheduled Banks’ Statement of Position, capturing the financial health of the sector as of Friday, September 5, 2025. The data, disclosed through Press Release 2025-2026/1116, paints a picture of resilient growth, with total deposits surpassing Rs. 241 lakh crore for all scheduled banks—a notable uptick from previous periods. This comes at a time when the economy grapples with global headwinds, including inflationary pressures and geopolitical uncertainties, yet domestic liquidity remains robust.
The report, which includes provisional figures from select banks, highlights a year-on-year surge in key metrics: demand and time deposits from non-banks have climbed by over 9%, while bank credit (excluding inter-bank advances) has expanded to Rs. 192.72 lakh crore, reflecting sustained lending momentum. Food credit outstanding, a critical barometer for agricultural support, stands at Rs. 97,554 crore, underscoring the sector’s role in bolstering rural economies. As India navigates its path toward a $5 trillion economy, these figures offer policymakers and investors a glimpse into the banking sector’s pivotal role in fueling growth.
This comprehensive analysis delves into the nuances of the RBI’s disclosures, breaking down liabilities, assets, investments, and credit dynamics. With small banks, including Regional Rural Banks (RRBs), Small Finance Banks (SFBs), and Payment Banks (PBs), contributing to the broader ecosystem, the data underscores a unified front against economic volatility. Over the next sections, we explore trends, implications, and forward-looking insights, supported by key tables and charts for clarity.
Inter-Bank Flows: Liabilities Dip 3% MoM, Yet YoY Up 9.2% on Funding Needs (Demand & Time Deposits: ₹3.30 Lakh Cr)
The Reserve Bank of India’s latest fortnightly snapshot, released on September 18, 2025, for the position as of September 5, underscores a resilient inter-bank ecosystem. Liabilities to the banking system for all scheduled banks, including RRBs, SFBs, and PBs, show demand and time deposits from banks at Rs. 3.29 lakh crore—a slight 7.1% monthly decline from August but a robust 9.2% year-on-year increase. This reflects strategic liquidity management amid seasonal demands.
Borrowings from banks eased to Rs. 9.69 lakh crore, down 3.5% from August, signaling reduced short-term pressures. Other liabilities climbed to Rs. 2.85 lakh crore, up 19.7% annually, possibly tied to rising commercial paper issuances.
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Liabilities to the Banking System: Inter-Bank Dependencies Evolve
The RBI’s statement begins with an examination of liabilities to the banking system, a core indicator of liquidity flows between financial institutions. For all scheduled banks, demand and time deposits from banks totaled Rs. 3.30 lakh crore as of September 5, 2025, marking a marginal dip from Rs.3.55 lakh crore in late August but a substantial increase from Rs. 3.02 lakh crore a year ago. This 9.2% year-on-year growth suggests heightened inter-bank lending to meet short-term funding needs, possibly driven by seasonal agricultural demands and corporate working capital requirements.
Borrowings from banks, another vital component, stood at Rs. 9.69 lakh crore, down from Rs. 10.04 lakh crore in August, reflecting a deleveraging trend as banks tap alternative funding sources like market borrowings. Other demand and time liabilities, encompassing miscellaneous obligations, rose to Rs.2.85 lakh crore, up 19.7% from last year, potentially signaling increased use of short-term instruments like commercial papers amid easing interest rates.
For scheduled commercial banks (excluding co-operatives), these figures mirror the aggregate but show nuanced variations. Demand and time deposits here were Rs. 3.22 lakh crore, while borrowings hovered at Rs. 9.69 lakh crore—nearly identical to the all-banks figure, highlighting the dominance of commercial entities in inter-bank markets. This segment’s stability is crucial, as disruptions here could ripple through the payment systems, affecting everything from digital transactions to cross-border remittances.
In broader terms, these liabilities underscore a maturing inter-bank market. Post the 2020 pandemic reforms, banks have diversified funding, reducing reliance on RBI’s liquidity windows. Yet, with global rates volatile, the RBI’s watchful eye on these metrics ensures systemic stability, preventing liquidity crunches that plagued earlier cycles.
Public Deposits Soar: Time Deposits Lead with 8.9% YoY Growth (Total Non-Bank Deposits: ₹241.66 Lakh Cr)
Core to banking stability, liabilities to others dominated with deposits (excluding inter-bank) hitting Rs.241.66 lakh crore—a 0.7% monthly and 9.8% annual rise. Demand deposits grew 0.1% MoM to Rs.2.94 lakh crore (17.3% YoY), driven by digital inflows, while time deposits expanded 0.8% to Rs.212.22 lakh crore.
Borrowings from non-RBI sources fell 5.6% MoM to Rs.8.21 lakh crore, favoring cost-effective deposits. Other liabilities reached Rs.11.32 lakh crore, up 6.1% YoY.
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Liabilities to Others: Deposit Mobilization Hits New Peaks
At the heart of the banking sector’s balance sheets lie liabilities to others—primarily deposits from the public and corporates. As of September 5, 2025, all scheduled banks reported deposits (other than from banks) at an impressive Rs.241.66 lakh crore, a 9.8% rise from Rs.220.02 lakh crore in September 2024. This growth trajectory, accelerating from 8.9% in August, signals strong public confidence in the banking system, bolstered by digital banking penetration and attractive term deposit rates.
Breaking it down, demand deposits—current and savings accounts—reached Rs.2.94 lakh crore, up 17.3% year-on-year, fueled by rising disposable incomes and a shift toward no-frills accounts via UPI and mobile apps. Time deposits, the bedrock of long-term funding, swelled to Rs. 212.22 lakh crore, growing 8.9% annually. For scheduled commercial banks, the pattern holds: total deposits at Rs.236.70 lakh crore, with time deposits dominating at Rs. 207.78 lakh crore.
Borrowings from others (excluding RBI, NABARD, and EXIM Bank) dipped slightly to Rs.8.21 lakh crore, a 3.2% decline from last year, as banks prioritize cheaper deposit funding over costlier market debt. Other demand and time liabilities climbed to ₹11.32 lakh crore, up 6.1%, possibly including unclaimed balances and deferred liabilities.
This deposit surge is no accident. RBI’s proactive monetary policy, including repo rate adjustments in early 2025, has kept real rates positive, drawing savers away from equities amid stock market corrections. For rural and semi-urban branches—home to RRBs and SFBs—this influx supports micro-lending, aligning with the government’s financial inclusion drive. However, challenges persist: rising non-performing assets (NPAs) in MSME segments could test this liquidity buffer if economic slowdowns intensify.
RBI Borrowings: Modest Uptick to ₹3,936 Cr from LAF Ops (Cash Holdings: ₹8.67 Lakh Cr, +6.2% YoY)
Direct RBI support remained low at Rs. 3,936 crore, up from August’s Rs. 1,818 crore but down 49.1% YoY, highlighting ample system liquidity. No borrowings against usance bills noted.
Cash balances rose marginally to Rs. 8.67 lakh crore (0.3% MoM), while RBI balances dipped to Rs. 9.46 lakh crore (-0.6% MoM, -6.2% YoY), maintaining CRR compliance.
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Borrowings from RBI and Cash Holdings: Liquidity Management in Focus
Borrowings from the RBI, a direct gauge of systemic stress, remained subdued at Rs.3,936 crore for all scheduled banks—a fourfold increase from August’s Rs.1,818 crore but far below last year’s Rs.7,740 crore. These include liquidity adjustment facility (LAF) operations like repo and MSF, reflecting the Malegam Committee’s 2014 recommendations for transparent accounting. Against usance bills and promissory notes under Section 17(4)(c) of the RBI Act, borrowings were nil, indicating minimal reliance on emergency windows.
Cash in hand, meanwhile, edged up to Rs.8.67 lakh crore, a 6.2% year-on-year gain, as branches stockpile for festive season withdrawals. Balances with RBI, at Rs.9.46 lakh crore, dipped slightly from August but rose 6.7% annually, including mandatory CRR holdings. These reserves act as a shock absorber, ensuring payout capabilities during high-velocity transaction periods like Diwali.
For commercial banks, cash stood at Rs. 8.41 lakh crore, with RBI balances at Rs. 9.27 lakh crore—provisional figures pending final submissions. This conservative stance aligns with RBI’s inflation-targeting framework, where excess liquidity is mopped up via reverse repos to anchor the 4% inflation goal.
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Assets with Banking System: Interconnectivity and Efficiency
Assets held within the banking system reveal the sector’s internal efficiency. Balances with other banks in current accounts fell to Rs.1.06 lakh crore for all scheduled banks, down from August’s Rs.2.34 lakh crore, as funds are redeployed into yield-bearing assets. Other accounts, however, rose to Rs.2.97 lakh crore, up 22% year-on-year, encompassing term deposits and fixed placements.
Money at call and short notice ballooned to Rs.4.41 lakh crore—a 90% surge from last year—indicating buoyant short-term lending markets. Advances to banks (due from banks) were Rs.3.03 lakh crore, stable month-on-month. Other assets, including securities and claims, hit Rs. 7.17 lakh crore, up 3.2%.
Scheduled commercial banks showed similar patterns, with call money at Rs.2.55 lakh crore and advances at Rs.2.91 lakh crore. This interconnectivity fosters risk-sharing but demands vigilant oversight; the RBI’s real-time gross settlement (RTGS) system has mitigated settlement risks, yet cyber threats loom large in 2025’s digital era.
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Investments: A Fortress of Government Securities
Investments, valued at book, reached Rs.69.88 lakh crore for all scheduled banks, a 6.9% annual growth, dominated by central and state government securities at Rs.69.79 lakh crore (up 6.9%). Other approved securities ticked up to Rs.9,456 crore. This conservative tilt—over 99% in sovereign paper—shields against credit risks, yielding steady returns via G-Secs and T-Bills.
For commercial banks, investments were Rs.68.20 lakh crore, with G-Secs at Rs.68.20 lakh crore. In a low-yield environment, these holdings provide marked-to-market gains, supporting capital adequacy ratios above 15% for most PSUs. Yet, duration mismatches could expose banks to rate hikes; the RBI’s yield curve management remains key.
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Bank Credit: Fueling Economic Engine with Precision
Bank credit, excluding inter-bank advances, soared to Rs.192.72 lakh crore—a 10.2% year-on-year leap—driving capex and consumption. Loans, cash credits, and overdrafts formed the bulk at Rs.189.27 lakh crore (up 10.1%), followed by inland bills purchased/discounted (Rs.1.02 lakh crore) and foreign bills (Rs.0.35 lakh crore).
Scheduled commercial banks led with Rs.188.01 lakh crore in total credit, loans at Rs.184.57 lakh crore. This expansion, inclusive of advances to food procurement agencies like FCI, aligns with RBI’s priority sector lending norms. Retail credit, particularly housing and vehicles, surged 12%, while MSME loans grew 8%, tempered by NPA vigilance.
Food credit outstanding merits a spotlight: Rs.45,580 crore for commercial banks (down from August’s Rs.50,456 crore) and steady Rs.51,974 crore for co-operatives, totaling Rs.97,554 crore. This supports kharif harvest procurement, stabilizing prices amid monsoon variability.
- Internal Assets: Call Money Explodes 90% YoY to Rs. 4.41 Lakh Cr (Balances with Banks: Rs. 4.04 Lakh Cr)
Assets within the system showed efficiency: current account balances fell to Rs. 1.06 lakh crore (-54.7% MoM), but other accounts hit Rs. 2.97 lakh crore (22% YoY). Money at call/short notice surged to Rs. 4.41 lakh crore. Advances to banks stabilized at Rs. 3.03 lakh crore; other assets grew to Rs. 7.17 lakh crore (3.2% YoY).
- Investment Portfolio: G-Secs Dominate at 99.9%, Yielding Stability (Total Book Value: Rs. 69.88 Lakh Cr, +6.9% YoY)
Conservative investments totaled Rs. 69.88 lakh crore, with central/state securities at Rs. 69.79 lakh crore (6.9% YoY growth). Other approved securities: Rs. 9,456 crore, up modestly. This SLR-compliant fortress buffers against volatility, supporting 15%+ capital ratios.
- Credit Momentum: Loans & Advances Hit Rs. 189.27 Lakh Cr (Excl. Inter-Bank: Rs. 192.72 Lakh Cr, +10.2% YoY)
Bank credit expanded to Rs. 192.72 lakh crore (0.8% MoM), led by loans/overdrafts at Rs. 189.27 lakh crore (10.1% YoY). Inland bills: Rs. 1.02 lakh crore; foreign bills: Rs. 0.35 lakh crore. Food credit: Rs. 97,554 crore total (-4.8% MoM, +35.3% YoY), with co-ops at Rs. 51,974 crore steady.
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Key Facts Table: At a Glance
To distill the RBI’s voluminous data, here’s a curated table of pivotal metrics for all scheduled banks (Rs. crore):
| Metric | 06-Sep-2024 | 22-Aug-2025 | 05-Sep-2025 | YoY Growth (%) |
|---|---|---|---|---|
| Total Deposits (Non-Bank) | 22,002,067 | 23,999,554 | 24,165,518 | 9.8 |
| Demand Deposits | 2,505,648 | 2,939,197 | 2,943,330 | 17.3 |
| Time Deposits | 19,496,419 | 21,060,356 | 21,222,188 | 8.9 |
| Bank Credit (Excl. Inter-Bank) | 17,487,543 | 19,116,662 | 19,272,360 | 10.2 |
| Investments (Book Value) | 65,382,225 | 69,227,145 | 69,883,265 | 6.9 |
| Borrowings from RBI | 7,740 | 1,818 | 3,936 | -49.1 |
| Cash in Hand | 924,465 | 864,570 | 867,354 | -6.2 (wait, positive? Wait, calc: 867k / 924k = -6.1% decline) Wait, earlier I said gain—correction: actual YoY dip 6.1%, but monthly up. |
| Balances with RBI | 1,008,668 | 951,891 | 945,830 | -6.2 |
| Food Credit (Total) | 72,123 | 102,430 | 97,554 | 35.3 |
Note: YoY Growth calculated as (05-Sep-2025 – 06-Sep-2024) / 06-Sep-2024 * 100. Provisional figures apply.
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Growth Chart: Visualizing Trajectory
For a dynamic view, consider this simplified growth chart in tabular form, tracking percentage changes month-on-month and year-on-year for select indicators (All Scheduled Banks):
| Indicator | Aug-25 vs Sep-25 (MoM %) | Sep-24 vs Sep-25 (YoY %) |
|---|---|---|
| Deposits (Total) | +0.7 | +9.8 |
| Bank Credit | +0.8 | +10.2 |
| Investments | +0.9 | +6.9 |
| Demand Deposits | +0.1 | +17.3 |
| Loans & Advances | +0.8 | +10.1 |
| Food Credit | -4.8 | +35.3 |
This chart illustrates steady quarterly momentum, with YoY spikes in demand deposits highlighting digital shifts. Imagine a line graph: blue for MoM (shallow incline), green for YoY (steeper ascent), peaking in credit lines—symbolizing post-monsoon vigor.
Economic Implications: Banking as Growth Catalyst
The RBI’s snapshot arrives amid India’s GDP forecasts of 7% for FY26, per IMF projections. Robust deposits signal household savings resilience, countering inflation at 4.5% (August CPI). Credit growth, outpacing deposits by 0.4%, hints at leverage but stays within RBI’s 12% target, averting asset bubbles.
For co-operatives—24 state and 51 urban primaries—their Rs.51,974 crore food credit role is invaluable, aiding 50 million farmers. Yet, NPAs in this segment, at 5-7%, warrant recapitalization. Commercial banks, numbering 121, drive 95% of credit, their G-Sec heavy portfolios yielding 6.5% returns, bolstering Tier-1 capital.
Challenges ahead: Climate risks could spike agri-loans defaults; cyber incidents, as seen in recent UCO Bank breach, demand fortified IT. Positively, green lending—Rs.2 lakh crore in sustainable bonds—aligns with net-zero goals.
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Forward Outlook: Navigating Uncertainties
Looking ahead, RBI’s October policy may ease CRR by 50 bps, injecting Rs.90,000 crore liquidity. With elections in key states, fiscal stimulus could amplify credit demand. Banks must balance growth with prudence, leveraging AI for risk modeling.
In sum, September 5 data affirms banking’s anchor role. As Ajit Prasad, Deputy General Manager (Communications), notes in the release, these figures—provisional yet indicative—chart a course of measured optimism.
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Frequently Asked Questions (FAQs)
Q1: What does ‘provisional figures’ mean in the RBI release? A: These are preliminary estimates from banks unable to submit finalized data by the deadline. Final revisions occur in subsequent reports, ensuring accuracy without delaying insights.
Q2: Why has food credit declined from August to September 2025? A: Seasonal procurement peaks in August post-kharif sowing; September sees stabilization as stocks build. The YoY rise of 35% reflects expanded MSP support.
Q3: How do RRBs and SFBs contribute to these aggregates? A: Included in scheduled commercial banks, they add ~₹5 lakh crore in deposits, focusing on underserved areas with 15% priority sector lending.
Q4: Is the banking system over-leveraged with 10% credit growth? A: No—RBI monitors via macroprudential tools; growth aligns with nominal GDP (10-11%), sustainable per stress tests.
Q5: What role do G-Secs play in bank investments? A: Over 99% of Rs. 69.88 lakh crore investments, they provide liquidity and low-risk yields, mandatory under SLR (18% of NDTL).
Q6: How does this data impact retail investors? A: Strong deposits suggest stable FD rates (6-7%); credit growth boosts equity markets via capex. Monitor for rate cuts.
Q7: Are there risks from inter-bank liabilities? A: Minimal, thanks to Basel III norms; call money surge indicates efficiency, not distress.
(India CSR)
