Kotak Mahindra Bank deposits surge 23% in Q2 on RBI swap boost

Kotak Mahindra Bank's deposit portfolio expanded significantly in the second quarter, driven by strong growth across segments and support from the central bank's liquidity management measures. Total deposits climbed 23% year-on-year, with the bank tapping the RBI's Strategic Liquidity Injection (SLI) window to mobilise $5.78 billion in foreign currency deposits.

Current Account and Savings Account (CASA) deposits, which form the core low-cost funding base for banks, grew 11.3% year-on-year to reach Rs 2.49 lakh crore from Rs 2.24 lakh crore in the corresponding quarter of the previous year. This growth in CASA deposits is considered crucial for maintaining healthy deposit ratios and funding stability.

The RBI introduced the Strategic Liquidity Injection window as a measure to ease liquidity pressures in the banking system during a period of elevated deposit outflows. The mechanism allows banks to borrow dollars from the central bank at predetermined rates, which are then converted to rupees and deployed for lending or investment activities.

The deposit growth comes at a time when Indian banks have faced scrutiny over loan-to-deposit ratios, with regulators flagging concerns about deposit mobilisation in an environment of competing investment opportunities for savers. Kotak Mahindra Bank's expansion in its deposit base, particularly through affordable CASA deposits, positions it better for credit growth going forward.