Pressure on the margins of banks in the country due to slow down increase in debt growth among high interest rates

Mumbai: Slow loan increase between high interest rates is putting pressure on the margin of the country’s banks. S&P Global has estimated that the total debt growth of India’s six largest private and public sector banks will slow down to 12.30 percent in the current financial year.

The debt growth rate in the last financial year was 22.50 percent. The country’s bank margin is under pressure due to slow growth of credit between high interest rates. Most banks are expected to be low in net interest margin.

Margin is also under pressure due to high deposits. The report also states that the banks will show more profits despite the recession in the loan hike, although the rate of profit growth will be slow.

To strengthen its balance sheet, some banks have adopted a strategy to reduce consumer loans and increase retail debt. Even though the central banks of America and Europe have reduced interest rates, the Reserve Bank of India has retained higher interest rates for a long time.

Due to high inflation, the Reserve Bank has been forced to keep the repo rate high. Meanwhile, it is believed that the RBI’s way of increasing liquidity has increased the chances of cut in repo rate.