Depositors unlikely to see immediate benefit from rate hike: CS Setty
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Key takeaway
RBI repo hike widens the loan-deposit repricing gap, supporting bank NIMs for 2-3 quarters
- Step 1 · The triggerRBI hikes repo rate; EBLR-linked loans reprice immediately while deposit rates lag due to ample system liquidity
- Step 2 · Knock-onbank NIMs expand for 2-3 quarters as asset yields rise faster than funding costs
- Step 3 · Knock-onbanks face less pressure to compete aggressively on loan spreads to defend deposit market share
- Step 4 · Knock-onSME floating-rate working capital and fresh term loans reprice upward with limited lender competition on rate
- Step 5 · Reaches youthe SME's interest cost on bank-funded working capital rises, compressing operating margin unless passed through
The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.
Source: The Hindu BusinessLine
See what today’s news does to your business. Atri by Branch² — Early-warning intelligence for your businessThis is automated analysis for information only. It is not investment advice, not a recommendation, and not a solicitation to buy or sell any security. Branch² is not authorised or regulated. Do your own research.