Under pressure bank NIMs to squeeze further after RBI's 25 bps cut

Banks may face further margin pressure as repo-linked loan rates reset faster than deposits, though liquidity support and CRR cuts could soften the impact in Q4

Net interest margins (NIMs) of scheduled commercial banks, which are already under pressure as deposit rates tend to adjust more slowly than lending rates, are likely to face further compression following the decision of the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) to cut the repo rate by another 25 basis points (bps) in its December meeting.

 

According to industry insiders, the impact of this additional rate cut will be felt in the final quarter of 2025-26 (FY26). However, liquidity infusion by the central bank and the cut in the cash reserve ratio (CRR) are expected to partially