Indian Banks Show Resilient Growth in Loans and Deposits as Forex Reserves Slightly Dip

Indian Banking Sector and Forex Reserves Update

In the fortnight ending October 3, 2025, Indian banks demonstrated healthy growth momentum with loans rising 11.4% and deposits increasing 9.9% year-on-year, according to the Reserve Bank of India (RBI). This indicates robust credit uptake and sustained deposit mobilization, underscoring confidence in the banking system.

However, India’s forex reserves saw a slight decline, falling by $2.176 billion to $697.78 billion as reported for the week ending October 10. The decrease primarily stemmed from a reduction in foreign currency assets, which offset gains in gold reserves, whose value rose by $3.6 billion crossing $100 billion for the first time. Special Drawing Rights (SDRs) and India’s position with the IMF also recorded minor declines.

Notably, the RBI confirmed that the federal government had no outstanding loans with it as of October 10, signaling fiscal prudence and stable public finances during this timeframe.

Notable Updates

Loan growth: Indian banks’ loans rose 11.4% year-on-year in the fortnight to October 3, reflecting continued credit demand.

Deposit increase: Deposits increased 9.9%, helping banks maintain liquidity and support lending activities.

Forex reserves: Reserves declined marginally to $697.78 billion as of October 10, mainly due to a drop in foreign currency assets.

Gold reserves: Gold reserves rose by $3.6 billion, surpassing $100 billion in value, reinforcing reserve diversification.

Government borrowing: The federal government had zero outstanding loans with RBI as of October 10, indicating controlled fiscal borrowing.

Major Takeaways

Steady credit environment: Loan and deposit growth underline resilience in banking sector fundamentals and credit appetite.

Forex reserve stability: Despite a slight dip, India maintains one of the largest forex reserves globally, providing economic buffers.

Gold as a hedge: Rising gold reserves reflect strategic diversification and protection against currency volatility.

Prudent fiscal stance: No outstanding government borrowings with RBI denote healthy fiscal management and borrowing discipline.

This combination of strong banking sector performance and substantial forex reserves positions India well for navigating global economic uncertainties while catering to internal growth needs.

Source: Reserve Bank of India data, Economic Times, MoneyControl, Reuters