Indian Banks Face Margin Squeeze as High Interest Rates and Weak Loan Growth Take a Toll

Indian banks are grappling with margin pressure as high interest rates drive up borrowing costs while loan growth slows, according to S&P Global. The combination of expensive deposits and weakening credit demand is squeezing net interest margins (NIMs), a key profitability metric for banks. With the Reserve Bank of India (RBI) maintaining a tight monetary policy to control inflation, lenders are struggling to pass on rising costs. Analysts warn that if this trend continues, it could impact banks' earnings and credit expansion, posing risks to economic growth.

Source: S&P Global