MUMBAI, Jan 5, 2026, 05:00 ET
CSB Bank shares rose as much as 7.8% to an all-time high of 519.95 rupees on Monday after the Kerala-based lender reported strong loan and deposit growth in a provisional update for the quarter ended Dec. 31. Deposits rose 21% year-on-year to 40,460 crore rupees and gross advances climbed 29% to 37,208 crore, while gold and jewellery loans jumped 46% to 19,023 crore, the bank said. 1
The early numbers matter because Indian lenders are heading into the busiest stretch of quarterly reporting with signs that credit demand is recovering from a mid-2025 slowdown. System-wide bank credit growth accelerated to 11.5% year-on-year in November, while analysts have flagged that loan growth has again started to outpace deposits, a funding imbalance that can raise borrowing costs for banks. 2
In broader markets, India’s benchmark indexes were little changed after the Nifty 50 briefly touched a fresh record earlier in the session. “The underlying tone remains fragile,” said Ashish Chaturmohta, managing director and fund manager of Apex PMS at JM Financial. 3
Financial stocks were in demand across the board, pushing the BSE Financial Services index to a record intraday high, while State Bank of India and Bank of Baroda touched new lifetime highs. Bank of Baroda said global advances rose 14.6% year-on-year to 13.43 trillion rupees at the end of the December quarter, while global deposits increased 10.3% to 15.46 trillion. 4
Ujjivan Small Finance Bank also gained after its quarterly update. The lender said deposits rose 22% year-on-year to 42,219 crore rupees and its gross loan book increased 21.6% to 37,055 crore, while its gross NPA ratio — loans that are overdue — eased to 2.19% from 2.45% in the previous quarter. 5
CSB’s update underscored investor appetite for secured retail lending, where growth can be fast and recoveries tend to be better than in unsecured credit. Gold-backed loans, in particular, often expand quickly when households use jewellery as collateral to access short-term funding.
Funding, though, is doing more of the work. CSB’s deposit growth was led by term deposits, which typically cost more than current and savings accounts, making the mix a key input for margins.
CASA — current and savings account deposits — is closely watched because it is usually the cheapest and most stable source of bank funding. A low or falling CASA ratio can force lenders to pay up for deposits, even when loan growth looks strong on paper.
The downside scenario is straightforward: if deposits do not keep up with credit demand, banks may face tougher competition for funding and a squeeze on profitability. Any sharper-than-expected swing in gold prices, or tighter rules around gold lending, would also test lenders that have leaned on the product for growth.
