mumbais financial district skyline is pictured after air pollution level started to drop during a nationwide lockdown to slow the spreading of the coronavirus disease covid19 india april 24 2020 reutershemanshi kamani mumbai july 28 reuters  loan growth in india is at a threeyear high and seen inching up further as economic activity gains traction but a much slower growth in deposits could send banks scurrying for funds and prompt deposit rate increases say analysts and bankers deposit growth has floundered as high inflation has resulted in less savings as would be depositors are choosing to put money into shares and mutual funds in search of better returns said madan sabnavis chief economist at stateowned lender bank of baroda bobns in order to bulk up its deposit growth countrys largest private lender hdfc bank hdbkns has started a shortterm drive to beef up its deposits by offering a higher rate of interest on nonresident accounts held by indians living abroad analysts believe that other lenders may also follow suit with similar moves as surplus funds in the system get slowly pulled out by the central bank measures banks margins and their profitability could come under pressure forcing them to not just raise deposit rates but also possibly go to the more expensive capital markets to raise funds needed to meet credit demand that could worry investors already in retreat due to global factors and send banks stock prices nsebank further down rating agency icra said in a note last week that it expected banks to aggressively start chasing deposits which will also lead to higher deposit rates indian banks deposit growth indepeci currently at 98 has stayed in singledigits for a large part of the last 14 months while credit growth inloaneci  having touched a record low of 56 in fy21  has nearly tripled to 144 in the fortnight to july 1st retail loan growth which includes personal loans mortgages auto loans has steadily been growing at a faster clip and continues to outpace corporate credit personal loans have been the main growth driver for the indian banking sector during the past few years as corporate lending has stalled due to npas nonperforming assets and deleveraging care ratings said in a report earlier this week going ahead while the prospects for credit growth appear promising high inflation and rate hikes may cast a shadow care said banks creditdeposit ratio  currently 73 of banks total deposits are being lent out  has been steadily rising indicating that their earning capacity is also improving but as credit demand picks up there could be pressure on funding unless deposit growth matches up in the next few months if the trend continues then we will have no other option but to raise deposit rates because the market conditions are also not very favourable for us to go to the market to raise growth capital said a senior executive at a stateowned bank reporting by nupur anand and swati bhat editing by simon cameronmoore