Indian banks find themselves in a delicate position following the Reserve Bank of India’s (RBI) 25-basis point rate cut. While they need to lower deposit rates to protect net interest margins (NIMs), they also have to mobilise deposits to fund credit growth, which is picking up in the economy and is expected to remain robust heading into the fourth quarter starting January 2026. This leaves banks with limited room to cut deposit rates at a time when lower returns are already pushing savers away from the banking system towards equity markets.
The RBI cut the repo rate by 25 basis
