25 of 29 banks grew loans faster than deposits in Q2 FY27 — and the cheap CASA money lagged too

Between October 1 and October 5, twenty-nine listed banks filed provisional business figures with the BSE for the quarter ended September 30, 2026. The filings are skeletal — period-end advances, deposits and, at most banks, CASA — but read together they settle one thing with unusual clarity: in 25 of the 29, year-on-year advances growth exceeded deposit growth. The median bank grew its loan book 22.7% against deposit growth of 17.0%, a gap of 5.7 percentage points.

The provisional figures settle volume. They say nothing about price — and a 5.7-point funding gap is, eventually, a price problem.

Central Bank of India reported the widest spread: gross advances up 29.8% year-on-year against deposit growth of 14.4% — a 15.4-point gap. Karnataka Bank follows at 13.0 points (advances +24.9%, deposits +12.0%), then Union Bank of India at 11.7 points (+18.5% against +6.9%), UCO Bank at 10.6 points (+24.7% against +14.1%) and Equitas Small Finance Bank at 10.5 points (+29.6% against +19.0%). These are the filings' own period-end, year-on-year figures; every one is provisional and subject to review by the bank's statutory auditors.

Four banks ran against the grain and grew deposits at least as fast as loans:

At the other end, the slowest numbers need stating precisely, because the slowest loan book and the slowest deposit franchise belong to different banks. IndusInd Bank reported the slowest advances growth of all 29 at +11.2%, on deposit growth of +10.1%. But it is not the slowest on deposits: Union Bank of India (+6.9%), Bandhan Bank (+9.2%) and Punjab National Bank (+9.9%) all grew deposits more slowly than IndusInd did.

Nineteen of the 29 banks disclose CASA growth alongside total deposit growth, and at 16 of the 19, CASA — the low-cost current-and-savings money — grew slower than total deposits. The skew runs to the top of the market: Kotak Mahindra grew CASA 11.3% against total deposit growth of 23.2%, and Axis 10.6% against 20.7%. Central Bank of India (+9.2% vs +14.4%), J&K Bank (+6.5% vs +16.3%) and CSB Bank (+6.0% vs +18.0%) show the same shape. Exactly three banks grew CASA faster than total deposits: Union Bank of India (+14.7% vs +6.9%), AU Small Finance Bank (+29.1% vs +28.6%) and Karnataka Bank (+14.9% vs +12.0%).

Ranked by the spread between total-deposit growth and CASA growth, the five widest gaps: Equitas Small Finance Bank at 20.1 points — its CASA actually shrank 1.04% against deposit growth of 19.03% — then RBL Bank at 20.0 points, Yes Bank at 12.9, CSB Bank at 12.0 and Kotak Mahindra at 11.9. The pattern is broad but not universal: Karnataka Bank's filing shows its CASA share of deposits rising 80 basis points year-on-year to 31.81%, and IDFC First Bank's CASA ratio rose from 50.1% to 51.3% on the ex-FCNR(B) basis its filing presents.

Several of these numbers carry their own asterisks, stated in the filings themselves. Axis Bank and IDFC First Bank both include FCNR(B) deposits raised under the RBI's swap facility: IDFC First reports ₹34,390 crore of FCNR(B) mobilised in the quarter, of which ₹24,885 crore was leverage extended through its IBU branch and booked back as domestic deposits — and both banks disclose that growth excluding this is lower (Axis: advances +18.8% and deposits +17.0% year-on-year on the ex-leverage basis in its filing). Punjab National Bank's cover letter is styled for the half year ended September 30, 2026, but its reported figures are point-in-time balances with quarter-on-quarter and year-on-year growth, directly comparable with the rest of this set. South Indian Bank's reported 18.67% advances growth becomes 19.81% on its own adjusted basis excluding a one-time technical write-off. And RBL Bank's filing notes that advances growth excluding loans booked by its international banking unit against FCNR(B) deposits was 30% year-on-year, well below the 40% gross-advances growth shown in its headline table.

Why the gap matters: a bank that lends faster than it gathers deposits must eventually fund the difference, and where the CASA lines above are any guide, the funding being added skews toward the expensive kind — term money rather than low-cost current and savings balances. The provisional updates disclose no margins and no pricing; that is not a flaw, it is their design. But the volume picture they settle — 25 of 29 stretching deposits to fund credit, with CASA trailing at 16 of the 19 that disclose it — suggests the line to read first in the actual September-quarter results is the net interest margin, not the loan growth the market already knows.