Private banks' margins fall as FCNR deposits raise funding costs

What happened: Leading Indian private sector banks reported a drop in net interest margins in the second quarter, driven mainly by costs tied to foreign currency non-resident deposits. Why it matters: Analysts said the leveraged nature of these deposits significantly impacted profitability, and banks also faced pressure from faster repricing of assets as interest rates declined.

Leading Indian private sector banks reported a drop in net interest margins in the second quarter, driven mainly by costs tied to foreign currency non-resident deposits.

Analysts said the leveraged nature of these deposits significantly impacted profitability, and banks also faced pressure from faster repricing of assets as interest rates declined.