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.
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