← Latest news 
PSU banks’ liquidity buffers are draining fast as loan demand surges and deposits lag
Economy
Published on 15 May 2026
LCR slipped toward minimums as banks burned excess liquidity
State-run banks in India are edging closer to regulatory minimums as liquidity coverage ratios fall, driven by loan growth outpacing retail deposit growth. In the March quarter, major PSU banks saw LCR drop by 10–12 percentage points to around 114%–118%, nearer the 100% threshold. Union Bank, Canara Bank and SBI reported sharp year-on-year declines while loans grew faster than deposits. Analysts warn the “easy” strategy of funding credit using excess liquidity is running out, though new norms from Q1 FY27 may ease runoff rates.
- Major PSU banks’ LCR fell 10 to 12 percentage points
- March quarter LCR landed near 114% to 118% versus 100% threshold
- Union Bank LCR dropped to 114% from 124% year-ago
- SBI LCR declined to 124% as loan growth outpaced deposits
- Deposit growth lagged credit demand as households shifted to market-linked alternatives
- New Q1 FY27 norms cut runoff for trusts partnerships and LLPs to 40% from 100%
Read the full story at The Economic Times
This summarization was done by Beige for a story published on 
The Economic Times