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



The banking sector’s net interest margin (NIM) fell to a three-year low of 3.98% in the June quarter, weighed down by the RBI’s repo rate cuts. While lending rates adjusted quickly, deposit costs remained sticky, putting pressure on bank profitability. Analysts expect margins to recover in the second half of FY26, provided deposit rates align and the RBI refrains from further rate cuts.