Growth in bank credit is racing ahead almost twice as fast as deposits for most lenders. The pace of credit growth has been much higher than what most lenders had forecast in the first quarter of the current financial year. Yet, banks are not scrambling for retail deposits and are taking a guarded approach by raising interest rates through limited-period offers as they are uncertain about how long credit growth will sustain.According to RBI data, bank credit grew 16.5% as of September-end, while deposits have grown 9.2%. Credit growth has further accelerated to 18% as of October 21, while deposits continue to grow at 9.5%. But rather than scale up deposit growth, banks are falling back on their investment and increasing their ratio of credit to deposit. Most banks have raised their credit-deposit ratio to over 80%.The country’s largest lender SBI has seen its credit growing by 20% as of September-end as compared to expectations of 12% at the beginning of the year. SBI chairman Dinesh Khara attributes the growth to ‘busy season’ and expects overall credit to grow by 14-16% in this financial year. According to Khara, the main drivers of credit are infrastructure, renewable power, oil marketing companies and services, which is largely non-banking finance companies. While demand from oil marketing companies is expected to taper as oil prices moderate, other sectors are expected to pick up.While the RBI has been raising interest rates every two months since May, Khara does not see it hindering credit demand yet. “As long as there is visibility of demand for the goods they produce, there will be a demand for credit from businesses. Moreover, it is the cost of raw materials that have a bigger impact on their costs while expenses on credit would be less than 10% of their overall costs,” he said.According to Bank of Baroda MD Sanjiv Chadha, bank credit does outpace deposit growth during a busy business cycle. “The scenario with respect to deposit rates is yet to stabilise. It makes sense to be flexible with rates so that you can align them to stable rates in coming months. Until we reach a stable rate, the revision will be aimed at attracting incremental deposits. While it is true the loan growth is robust, we cannot extrapolate this growth indefinitely into the future,” said Chadha.Union Bank of India which has registered a 21.9% growth in credit for the first half is targeting a credit growth of 10-12% for the whole year