Banks’ margins slip to lowest in 3 years on rate cut impact

August 21, 2025

The banking sector’s net interest margin (NIM) has declined to a three-year low of 3.98% in the June quarter, impacted by the RBI’s repo rate cuts. Lending rates adjusted faster than deposit costs, squeezing bank profits. Analysts anticipate NIM improvement in the second half of FY26, contingent on deposit rate adjustments and no further rate cuts by the RBI.

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