To keep up LCR-a regulatory requirement to restrict the influence of sudden outflows in deposits-banks purchase the inventory of high-quality liquid property (HQLA) that may be liquidated to pay depositors. It’s calculated because the ratio of HQLA to whole internet money outflows anticipated over the subsequent 30 days.
HDFC Financial institution raised its LCR by 6 share factors to 124%, Sure Financial institution by 10 share factors to 135%, whereas Canara Financial institution noticed the most important enhance, with its LCR rising to 144% from 125% in Q4FY25. On common, LCR rose by roughly 6.5 share factors through the June quarter of FY26, confirmed an evaluation of the earnings statements.
“When share of retail deposits will increase, LCR can be excessive as a result of run-off issue for retail deposits is decrease,” mentioned AM Karthik, senior vp, monetary sector rankings, ICRA. “Moreover, with credit score progress gradual, banks are investing in property that qualify as HQLA, so there’s a push for increased LCR from each side.”
Whereas retail deposits grew, wholesale and company deposits declined. Sure Financial institution’s wholesale deposits fell 13.9% to ?1.07 lakh crore in contrast with the earlier quarter. Bandhan Financial institution’s wholesale deposits rose 4% to ?49,147 crore. HDFC Financial institution reported a modest 5.2% progress in wholesale deposits to ?9.6 lakh crore in Q1FY26 from a yr in the past.
The Reserve Financial institution of India (RBI) has mandated that from April 1, 2026, banks preserve the next run-off issue of two.5% for retail and small enterprise deposits which can be accessible by way of web and cell banking. The run-off issue represents the assumed price of sudden withdrawals.
Bankers famous that retail deposits are thought-about extra secure, lowering the probability of enormous outflows and contributing to increased LCRs. As well as, slower credit score progress and surplus liquidity have led banks to take a position extra funds in HQLA-eligible property.
HDFC Financial institution reported a 1.7% on-year progress in company advances for June quarter, a decline from 18.8% progress in similar interval final yr. ICICI Financial institution’s home company mortgage e book rose by 7.5%, down from 10.3% beforehand.