According to the Reserve Bank data, credit growth slowed to 13.4 per cent in FY 2014, down from 20 per cent average during 2008-10, while deposit growth eased to 14 per cent from a high 20 per cent during the same period, and non-food credit remained on the back-foot at 15 per cent against 19 per cent in 2008-10.
"The downward rigidity in deposit rates has also lowered the banks' ability to cut lending rates. Therefore, the credit-deposit ratio, which has hardened in the past two years, is unlikely to ease below 75 per cent," DBS economist Radhika Rao said in a note.
However, on the positive side, she noted that for the first time in many years real returns on savings are back into the black in terms of headline inflation.
"The real rates for savers based on WPI are back in the black, while the rate adjusted for CPI inflation has narrowed to less than -0.4 per cent in the March quarter, up from -3.2 per cent between the July and December 2013 quarters," Rao said. She also said part of this slowdown is due to the weak economic growth in the past two years.