Small and mid-sized private sector banks have reported a healthy deposit growth in the third quarter, even as they have struggled to grow their loan books, as per exchange filings by three lenders. Despite interest rates being the lowest in over a decade, the pandemic and the resultant economic impact has ensured that loan demand is very low and the system's credit growth is stuttering at about 6 pc. Expending income on deposits that do not fetch income through lending is a cost on banks.

Microlender-turned-universal bank Bandhan Bank was the only one which showed a surge in loan book, which grew 23 pc on an annual basis to Rs 80,255 crore, while in case of IndusInd Bank and IDFC First Bank, the growth has been marginal, separate exchange filings showed. IndusInd Bank had seen a shrinking of the loan book in the nine months to September.

 It increased the loan book by over Rs 6,000 crore during the December quarter to end slightly above the year-ago period's Rs 2.07 lakh crore, while IDFC First Bank's book grew by over Rs 3,000 crore during the quarter ended December 2020. Bandhan Bank reported a 30 pc increase in deposits compared to the year-ago period, IDFC First Bank's deposits grew 41 pc and IndusInd Bank witnessed 11 pc growth during the quarter. The share of the low-cost CASA deposits as of December 31, 2020 for IndusInd Bank was at 40.5 pc, almost at par with the year-ago period, while Bandhan Bank witnessed a healthy rise of 43 pc. IDFC First Bank said its retail deposits registered a growth of 100 pc on a year-on-year basis

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