When a new regulation affects all companies of the sector equally, in my opinion it is not a bad news. In case of banks, the credit demand has remained strong inspite of real interest rate going over 2%. RBI has maintained the repo at 6.5%. It should start coming down within a few months, triggering a proportionate reduction in deposit rates followed later by lending rates. Therefore banks will be able to maintain NIMs.
All well run banks will continue to do well as competitive force remains the same. In fact whenever going gets a little steeper, the companies in better shape, better business execution, and stronger focus on customers, move relatively faster than others.
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