PSBs’ Spreads Hit 10-Year Low: Implications for Lending, Deposits, and Profitability
Public Sector Banks (PSBs) in India have seen their spreads between lending and deposit rates shrink to a 10-year low of 2.28%, according to data from the Economic Times BFSI. This is significantly lower than the 3.81% spread maintained by Private Banks (PVBs).
This narrowing of spreads reflects several factors, including:
Increased competition: The banking sector in India is becoming increasingly competitive, with both PSBs and PVBs vying for market share. This has put pressure on banks to offer lower lending rates and higher deposit rates, leading to a compression of spreads.
RBI's policy stance: The Reserve Bank of India (RBI) has been maintaining an accommodative monetary policy stance in recent months, which has helped to keep interest rates low. This has also contributed t...