Credit costs in Indian banks are expected to continue in declining trend in the second half of the current financial year 2025, though near-term slippages are likely to remain elevated, according to a report by global financial services firm UBS.
Indian banks are seeing a marked easing in structural deposit pressures, helped by the Reserve Bank of India's (RBI) aggressive liquidity support measures in 2025, according to Fitch Ratings.
A research report highlighted that even if the Reserve Bank of India (RBI) announces a rate cut, deposit costs in the banking system are expected to remain high due to the prevailing high credit-to-deposit ratio.
"Initially, the rate cuts will be credit negative for most US banks. We expect their deposit costs to reprice downward more slowly than their loan yields, constraining net interest income, which is most banks' largest revenue source." Said the report