What is Loan -to -Deposit Ratio

 The loan- to- deposit ratio is used to access a bank's liquidity by comparing a bank's total loans to its total deposits for the same period

To calculate the loan-to- deposit ratio, divide a banks total amount of loans by the total amount of deposits for the same period.

Typically the ideal loan- to- deposit ratio is 80% to 90%. A loan- to-deposit ratio 100% means a bank is funding all its loans from its deposits. This is not good. This hampers bank's liquidity.

Dr Sucheta Dalvi



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