MUMBAI: HDFC Bank’s chief has admitted that the bank has fallen short of its deposit mobilisation growth and has set a very wide range for credit-deposit targets for the current financial year and the next, highlighting the uncertain environment.“Having focused on granular segments has given us encouraging outcomes. We did, however, fall short of our strong ambitions, but we are confident that continued focus on our strengths will bring the expected outcomes,” said Sashidhar Jagdishan, addressing analysts in an earnings call on Friday.The bank’s credit-to-deposit ratio stood at 98.7% as of the Dec 2025 quarter (Q3 FY26). The bank’s CFO Srinivasan Vaidyanathan said the bank aims to bring down its CD ratio to the 92-96% range for the current financial year and improve it further to the 85-90% range by FY27.While deposit growth lagging growth in loans is a industry-wide phenomenon, it particularly affects HDFC Bank.Before the merger, the bank operated with a credit-to-deposit ratio of 87-88%. Following the merger with parent HDFC, the ratio rose to around 110%, primarily due to HDFC’s dependence on borrowings.“We believe that our glide path to lowering the CD ratio will continue. It is an important focus for sustainable profitability. I completely acknowledge that the easing cycle, with credit growth as a focus in the country, surely needs our participation. So the speed of CD ratio movement depends on how we are able to provide funding in the system at rational rates,” said Jagdishan.HDFC Bank had hoped to replace its parent’s borrowings with low-cost funds based on the liquidity situation when the merger was announced in 2022. However, within a month of the merger, RBI raised the repo rate by 40 basis points to curb market and price volatility in the wake of supply disruptions caused by the Russia-Ukraine war.This took the cumulative tightening from May 2022 to 250 basis points, pushing the repo rate to 6.50%, where it remained unchanged until rate cuts began in late 2024 amid easing inflation.Now, with RBI in a rate-easing cycle and a large part of HDFC Bank’s loan book linked to floating rates, the bank faces the challenge of growing deposits faster than loans while simultaneously bringing down funding costs.
