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Net interest margin unlikely to come down substantially: Rangarajan

Posted on Nov 24, 10:31PM | IANS

Prime Minister's Economic Advisory Council chairman C. Rangarajan Saturday said he does not expect a substantial drop in the net interest margin (NIM) of banks soon.

"I do not think that the net interest margin is coming down substantially," Rangarajan said at an interactive session of MCC Chamber of Commerce and Industry here.

He was replying to an observation by the industry lobby that banks were charging higher NIM and it made capital costly in the country.

On the industry's demand for narrowing down the "high" cost difference by banks, Rangarajan said: "Currently, the average NIM is below 4 percent. I think it is going to be tough reducing it very much below that."

The banks, however, are facing pressures on their NIMs as a rise in cost of deposits has resulted in a significant drop in margins of a large number of lenders.