# Rising deposit costs squeeze bank margins, rates may stay narrow 2026-08-06T21:22:42+00:00 | Business & Economy | Indian Opinion Desk Corroboration: 1 independent outlet Reserve Bank of India Governor Sanjay Malhotra flagged a decline in banking system net interest margins to 3.21% in June 2026 from 3.26% a year ago, Livemint reports. Bank credit grew 17.7% year-on-year while deposits rose only 12.7%, leaving a 5 percentage point gap, according to CareEdge Ratings. Private banks faced sharper funding pressure, with their fresh lending-deposit spreads narrowing 25 basis points in June as deposit rates rose 25 bps. Lenders expect margins to remain under pressure until deposit growth catches up, though liquidity improved in July with surplus rising to Rs 2.5 lakh crore. ## Coverage - bfsi.economictimes.indiatimes.com - bfsi.economictimes.indiatimes.com - livemint.com Tags: banks, credit growth, deposits, interest rates, private banks Canonical: https://indianopinion.org/bank-deposit-costs-rise-as-credit-growth-outpaces-deposits/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/bank-deposit-costs-rise-as-credit-growth-outpaces-deposits/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes.