New Delhi, May 18 -- Mumbai - Public sector banks (PSBs) are increasingly using surplus liquidity already available with them and also borrowing short-term funds from the Reserve Bank of India (RBI) to support loan growth, as deposits continue to lag behind credit demand.

System-level bank credit grew 16.1% to Rs.214 trillion in the financial year to 31 March (FY26) whereas deposits rose 13.5% to Rs.262 trillion.

The country's largest lender, State Bank of India (SBI), saw gross advances rise 16.9% from a year earlier to Rs.49.3 trillion in FY26, whereas deposits increased 11% to Rs.59.7 trillion at the end of March.

In the post-earnings press conference earlier this month, SBI chairman C.S. Setty said that while the bank would like to...