Leading Indian banks are offering deposit rates which are higher than home loan rates, resulting in a negative spread and if deposit mobilisation challenges remain, the banking system business model will face a challenge, Kotak Mahindra Bank’s founder Uday Kotak said today. HDFC Bank, too, has been raising funds via CDs to lower its credit-deposit ratio which got elevated after the merger of erstwhile Housing Development Finance Corp with HDFC BankWhile customers are parking funds in higher-yielding fixed deposits or other equity market instruments, the efficiencies in corporate- and government-backed companies have led to a fall in banks’ CASA ratio.

Rush for higher cost deposits

Banks have been facing a deposit mobilisation challenge, especially in acquiring low-cost current account and savings account (CASA), over the last two-three years. News agency Reuters reported that India’s IndusInd Bank garnered billion in higher-cost bulk deposits in March, its biggest monthly haul in at least two years, as the lender shored up its funding base after disclosing accounting lapses. It paid 7.90 per cent on its one-year CDs this month, 20 basis points higher than what it had paid for similar deposits in February, the data showed. “Excluding opex.

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Low cost retail deposits (CASA non wholesale) show muted growth across the system. Yet, banks are issuing home loans at 8.5 per cent floating rate. Borrow at 9 per cent and lend at 8.5! -0.5 per cent spread. And repo rates likely to drop.

What about the opex/ credit costs? If the deposit tightness persists it is a challenge to the banking business model” he added.“Leading banks are taking 1 year wholesale deposits at ~8 per cent. Translates to loaded marginal deposit cost of 9 per cent+ after CRR (0 interest), SLR, deposit insurance, priority sector,” he said.
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Lenders are therefore turning to certificate of deposit (CDs) to raise funds. According to the Reserve Bank of India’s (RBI) latest monthly bulletin, primary market issuances of CDs by banks rose 34 per cent year-on-year (y-o-y) to reach an all-time high of ₹10.58 lakh crore during FY2024-25 (up to March 7, 2025) as against ₹7.89 lakh crore recorded in the year-ago period amid persisting gap in credit and deposit growth.

Cognizant CEO Ravi Kumar S stressed the company’s human capital strength while addressing investors and analysts at Investor Day 2025 in New York on Tuesday. “So we hired 20,000 school graduates. We have huge usually invested into learning infrastructure.

We think when the next wave comes, we have more people inside even before we can start to hire,” he said. Nearly 14,000 associates have returned to the company, he told analysts. The next wave of enterprise transformation is in the areas of embedded engineering; “Physicality” product engineering; smart manufacturing; autonomous systems; AI; enabling hyper-productivity; Industrializing AI and ‘identifying’ the enterprise, he said.

Every time there was a new wave, everybody went and hired people. However, Cognizant first used a reskilling infrastructure to get ready at scale in economics, he noted.Kathy Diaz, Chief People Officer, Cognizant, said, there is an increasing returner rate with over 50 per cent increase in two years, and 20,000 more in pipeline.The company said that in 2023-2024, it had three imperatives. The first was to become an employer of choice.

The second was to optimize delivery and operations by improving margin execution on large deals, restructure and streamline the organization with NextGen program.

The third was to accelerate growth by reinvigorating financial services, extend growth beyond healthcare into products and resources and CMT. The strength of Cognizant’s culture comes from entrepreneurial spirit, he added, sharing that the company’s Bluebolt innovation initiative has given rise to 2,50,000 ideas from the company’s associates with 50 per cent of them in AI.

“We are a hiring magnet. Right now, I have the ability to hire 20,000 laterals per quarter. I am not only preparing for a slow velocity market, but preparing for a high velocity market if it happens at any point of time,” he added.

“We are a human capital company. The first thing I did when I came on board was to have employees on my side. And then I had clients on my side and now I’m hoping investors are on my side. There are 70,000 people who have 10 plus years in Cognizant. That was the essence of who we were,” he said.

As of March 25, 2025, India’s economy is showing signs of recovery after what many have called its toughest slowdown in years. According to a recent Goldman Sachs report highlighted by ANI News, the worst may be behind us—but don’t pop the champagne just yet. While the nation’s economic engine is revving up again, experts caution that market volatility could stick around like an uninvited guest, keeping investors on edge.

A Light at the End of the Tunnel

For months, headlines have painted a grim picture of India’s economic landscape—sluggish growth, jittery markets, and a sense of unease among businesses and households alike. But Goldman Sachs, a global financial heavyweight, now says the tide is turning. The report, released on March 26, 2025, suggests that India’s economic slowdown has bottomed out, with key indicators pointing to a gradual rebound. Think of it as the moment the rain finally stops, and you can step outside without an umbrella—cautiously optimistic, but still checking the sky.

What’s driving this shift? For one, India’s resilience is shining through. Despite global headwinds like trade tensions and fluctuating commodity prices, the country’s domestic consumption and agricultural sectors are holding strong, acting as pillars of stability. The Reserve Bank of India (RBI) echoed this sentiment earlier this month, noting that consumer spending and rural demand are picking up steam. It’s not a full-on sprint to prosperity, but it’s a steady jog in the right direction.

Volatility: The Unpredictable Guest

Here’s the catch: while the economy might be stabilizing, the financial markets are still doing a bit of a roller coaster dance. Goldman Sachs warns that volatility isn’t going anywhere soon. Why? Global uncertainties—like U.S. tariff threats and geopolitical tensions—are casting long shadows. Closer to home, foreign investors have been pulling funds out since October, sending the Sensex and Nifty into a tailspin from their all-time highs. It’s like trying to enjoy a picnic while the wind keeps blowing your napkins away—frustrating and hard to ignore.

For everyday investors, this means a bumpy ride ahead. Small-cap stocks, once the darlings of the market, have taken a beating, and even blue-chip companies aren’t immune. Analysts suggest that while the long-term outlook for India remains solid, the short-term could feel like navigating a stormy sea. “Volatility persists,” the Goldman Sachs report notes, urging caution for those hoping for a quick market recovery.

What’s Next for India’s Economy?

So, where does this leave us? For the average Indian—whether you’re a farmer in Punjab, a tech worker in Bengaluru, or a shopkeeper in Mumbai—the news is bittersweet. The economy is clawing its way back, which could mean more jobs, better wages, and a little extra cash in your pocket down the line. But if you’ve got money in the stock market, you might want to buckle up and keep an eye on those global headlines.

Goldman Sachs isn’t alone in its mixed outlook. Other experts, like those at Moody’s Ratings, predict India’s growth could top 6.5% in the next fiscal year, fueled by government spending and a rebound in private investment. Yet, they too nod to the “global uncertainty” that could throw a wrench in the works. It’s a classic case of two steps forward, one step back—progress, but with a side of caution.

Navigating the Road Ahead

For now, India stands at a crossroads. The worst of the economic slowdown may be over, but the path to stability isn’t a straight line. Families and businesses alike are watching closely, hoping the recovery takes root while bracing for market swings. As one market analyst put it, “India’s got the fundamentals to shine, but the world’s a messy place right now.”

If you’re an investor or just someone trying to make sense of it all, the takeaway is simple: there’s hope on the horizon, but don’t bet the farm just yet. Keep your eyes peeled for updates—whether it’s the next RBI report or the latest twist in global trade talks. India’s economic story is far from over, and the next chapter promises to be anything but dull.