'Banks' profitability hit on shrinking interest margin amid tech adoption burden, falling rates'

NIM, banks, sbi, PHD, dhanlaxmi, fintech, bank of india

Profitability of lenders is getting affected due to shrinking net interest margin (NIM), owing to falling rates as well as increasing burden of compliance and technology adoption, a senior SBI official said on Thursday. “Change in business models of the banks, increasing cost of capital, cost of compliance, cost of adopting new technologies, all these have been shrinking NIM as we have seen that the interest rates have been low.

“I think the Reserve Bank has not changed the repo and reverse repo since May 2020 and they have been having the accommodative stance. Accordingly, the lending rates are low, deposit rates are also low. So, the NIM (net interest margin) of the banks is shrinking,” Manju S Bolakani, chief general manager of State

Bank of India

(SBI), said.

So, the profitability of banks has been affected unless they have a large treasury like SBI, she said while speaking at a webinar on the ‘Indian Banking Sector-Resilience and Resurrection’ organised by the PHD Chamber of Commerce and Industry.

“We may be able to offset some of these costs with the treasury profits,” she added.

Bolakani said the increasing compliance burden has been causing a lot of strain on the resources. Nowadays, compliance comes before business.

About the disruption caused by the


players in the banking space, the official said the new entrants are forcing the banks to seek partnerships with the fintechs and introduce new products and also to convert themselves into fintech companies.

“The threat which is posed by fintech typically targets the most profitable area in financial services… They are better off because they do not have the brick-and-mortar structure, which is a source of cost for us,” she added.

Big technology companies like Google, Amazon and Facebook are entering digital financing because they have a substantial footprint in the payment system, she said.

“Because of this, traditional banks are facing a lot of competition,” Bolakani said.

Nidhu Saxena, general manager (retail banking, MSME and bancassurance business) at UCO Bank, said MSMEs have been badly affected due to the pandemic.

“There has been a mismatch in liquidity (for micro, small and medium enterprises),” he said.

Saxena added that the government and the RBI have been there to support the economy, and a lot of measures have been introduced to handhold the sector since the onset of the pandemic.

He said green shoots in the economy are now visible as firms are getting back to work and the GST collection is also rising.

Jana Small Finance Bank Managing Director and CEO Ajay Kanwal said MSMEs have faced the toughest challenges and it may pose threat to India’s USD 5-trillion economy goal.

Shivan J K, MD and CEO of


Bank, said non-banking financial companies are getting back to the growth path gradually as demand for vehicle and equipment finance is seen rising.

Internet Explorer Channel Network
News Related


Mohan Bhagwat calls for review, reformulation of National Population Policy keeping next 50 years in mind

RSS chief Mohan Bhagwat Expressing concern over the “rapid growth” in the country’s population, RSS chief Mohan Bhagwat on Friday called for a review and reformulation of the National Population ... Read more »

India slips seven positions to 101, in Global Hunger Index 2021, lags behind Pakistan, Bangladesh and Nepal

India has slipped to 101st position in the Global Hunger Index (GHI) 2021 of 116 countries, from its 2020 position of 94th and is behind its neighbours Pakistan, Bangladesh and ... Read more »

Odisha: Physical classes for 8, 11 standard students to resume from Oct 21

The Odisha government on Friday announced resumption of physical classes for students of 8th and 11th standards from October 21 as the state is witnessing a declining trend in COVID-19 ... Read more »

24 empty wagons of goods train derail in UP

Twenty-four empty wagons of a <a href="/tag/goods-train“>goods train derailed near Ambiapur on the busy Delhi-Howrah rail route, almost 50 km from Kanpur railway station Friday, officials said, adding no loss ... Read more »

RSS chief Mohan Bhagwat urges state govts to hand over operating rights of Hindu temples to Hindus

Rashtriya Swayamsewak Sangh chief Mohan Bhagwat on Friday suggested that the operating rights of the Hindu temples be handed over to the Hindu community. The RSS chief also suggested that ... Read more »

India has faced Covid crisis with resilience and fortitude: Sitharaman

India has not only faced the COVID-19 crisis with great resilience and fortitude but has also played a major role and “walked the talk” on the global fight against the ... Read more »

IIM-Udaipur ranked among country's top 100 B-schools in FT-MIM ranking for 3rd consecutive year

Representational image Indian Institute of Management, Udaipur has been ranked among the top 100 business schools in the Financial Times (FT) Master in Management (MIM) global ranking for the third ... Read more »

India set to achieve the $400 billion annual exports milestone

India has clocked record exports in the first half of FY22 at $197.89 billion and is closer than ever to achieve the $400 billion annual exports milestone by the end ... Read more »

Business travel resumes slowly in India

India Inc is slowly resuming business travel with caution, mostly led by employees in sales and customer services as well as the leadership teams. Companies like Deloitte, KPMG, Mercedes-Benz, upGrad, ... Read more »

Close to half of retail, MSME loans to move to digital lending in 2-3 yrs: Union Bank MD

MUMBAI: With digitization gaining pace, close to 50 per cent of retail and MSME loans offered by banks will shift to digital lending platforms over the next two to three ... Read more »

Proposed changes to Accountants Act to enhance regulator's oversight and audit quality

SINGAPORE (THE BUSINESS TIMES) – The Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (Acra) have announced long-awaited proposed amendments to Singapore’s Accountants Act aimed at enhancing ... Read more »

When wild jumbos make life miserable in the 'Kashmir of the South'

When the majestic mammoth was suddenly seen emerging from the dark and turned to his estate grocery shop silently in the wee hours, a frightening anxiety and helplessness gripped Punyavel, ... Read more »

APJ Abdul Kalam will be remembered for contribution to strengthening India's defence capabilities: Vice Prez M Venkaiah Naidu

Vice President M Venkaiah Naidu on Friday paid tributes to former president A P J Abdul Kalam on his 90th birth anniversary, saying he will always be remembered for his ... Read more »

RSS chief Bhagwat calls for new population policy in Vijaya Dashami address, raises concern over "imbalance"

Expressing concern over the “population imbalance” in the country, Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat on Friday said that nation’s population policy should be reconsidered. In his annual Vijaya ... Read more »

Health ministry urges DoPT for filling up of vacant posts

The Union health ministry has requested the DoPT for an early and timely action to fill up the vacancies in nine senior posts, stating that this has put it under ... Read more »

Noida records first COVID-19 death after 4 months, toll rises to 467

Noida, Uttar Pradesh’s Gautam Buddh Nagar has recorded its first COVID-19 fatality after a gap of four months, taking the district’s toll rising to 467, according to official figures. Officials ... Read more »

Metro rail project in J&K to be approved by next week: Hardeep Singh Puri

Union Minister of Civil Aviation Hardeep Singh Puri Union Minister Hardeep Singh Puri on Thursday said the metro rail project in Jammu and Kashmir will be approved by next week. ... Read more »

Bitcoin, OTT, Narcotics & Population: Here are the key takeaways from RSS chief Mohan Bhagwat's Vijayadashami speech

Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat – January 2018 Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat on October 15 delivered his annual Vijayadashami speech at the organisation’s headquarters in ... Read more »

Ransomware attacks most pressing threats faced by public, private sectors: India

Ransomware attacks are one of the most pressing threats faced by public and private sectors, India has told a US-led international meet on the latest emerging challenge and has called ... Read more »

Coronavirus Update | Active COVID-19 cases in country lowest in 216 days

Since the beginning of the country’s vaccination drive, 69.26 crore people have received at least one dose of Covid-19 vaccine, and 27.88 crore are fully vaccinated. (Representative image) India logged ... Read more »

Consumer goods demand rises up to 15% in Navratri

Demand for smartphones, televisions, refrigerators, apparel and cars have surged by up to 15% during Navratri over last year, with manufacturers and retailers saying consumer sentiment is at its most ... Read more »

Govt asks captive coal mines to boost output by 10 MT

The government has asked both private and state-owned companies with captive coal mines to produce 10 million tonnes more coal than targeted in the next six months to meet the ... Read more »

Wall Street Week Ahead: Regional bank loan growth could hint at healthier supply chains

NEW YORK: If regional banks show signs of accelerating loan growth when they report earnings in the week ahead, it could signal an easing of the supply chain bottlenecks that ... Read more »

Active COVID-19 cases in country lowest in 216 days

India logged 16,862 new coronavirus infections taking the total tally of COVID-19 cases to 3,40,37,592, while the active cases declined to 2,03,678, the lowest in 216 days, according to the ... Read more »

Terrorists resorting to targeted killings in Jammu and Kashmir: RSS chief Bhagwat

RSS chief Mohan Bhagwat on Friday said terrorists were resorting to targeted killings in Jammu and Kashmir to instil fear. Addressing the annual Vijayadashmi rally at Reshimbagh ground in Nagpur, ... Read more »

PayPal-backed fintech Tala raises $145 million in Series E round

Tala was founded in 2013 by former Citigroup Executive Shivani Siroya Global financial services technology company Tala said on October 15 that it had raised $145 million in a Series ... Read more »

COVID-19 Vaccine Tracker: Over 30 lakh doses given on October 14

Since the beginning of the country’s vaccination drive, 69.26 crore people have received at least one dose of Covid-19 vaccine, and 27.88 crore are fully vaccinated. (Representative image) India administered ... Read more »

PM pays tributes to former president APJ Abdul Kalam on his birth anniversary

Prime Minister Narendra Modi paid tributes to former president A P J Abdul Kalam on his birth anniversary on Friday, saying he dedicated his life in making India strong, prosperous ... Read more »

IMF warns of divergent recoveries from pandemic

The policy-setting body of the International Monetary Fund (IMF) has warned of divergent recoveries from the Covid-19 pandemic, pledging to strengthen cooperation to expedite universal vaccination. “The global economic recovery ... Read more »

Stocks seen bullish next week but earnings will dictate market strength

MUMBAI: The domestic equity market is expected to sustain its bullish momentum next week, as investors remain uninhibited by softness in global markets. The strong beginning to the September quarter ... Read more »

Goa to resume in-person learning for classes IX-XII from October 18

Schools in Goa have been allowed to resume in-person classes for IX to XII standard students from October 18 onwards, the state government announced. The decision was taken by the ... Read more »

ED questions co-conspirator of Rajiv Saxena in Moser Baer loan fraud case

The Enforcement Directorate (ED) last month arrested and questioned an employee and close confidante of the nephew of former chief minister Kamal Nath in connection with its money laundering probe ... Read more »

OVL seeks waiver of US sanctions on Venezuela to recover dividends

ONGC Videsh has approached the Biden administration for a waiver from US sanctions on Venezuela so that the company can recover its dividends of more than $400 million stuck for ... Read more »

US poised to allow its first Bitcoin futures ETF to begin trading

NEW YORK (BLOOMBERG) – The Securities and Exchange Commission (SEC) is poised to allow the first US Bitcoin futures exchange-traded fund (ETF) to begin trading in a watershed moment for ... Read more »

Wall Street ends up sharply as earnings, economic data lift optimism

NEW YORK: US stocks surged on Thursday as companies including Morgan Stanley and UnitedHealth gained following strong results, while data on the labor market and inflation soothed worries about the ... Read more »

Third wave may not be as severe as the ones before, say experts

The third wave of Covid-19 is unlikely to be as severe as the first and the second wave, public health experts told ET. While the Delta variant was responsible for ... Read more »

Ashish Mishra, others taken to site; cops conduct dummy run

Ashish Mishra and three of the six accused in the Lakhimpur Kheri case were taken to the site of the crime on Thursday by the special investigation team probing the ... Read more »

Ramkrishna Forgings plans to raise up to Rs 500 cr via QIP

Mumbai: Leading forging component maker Ramkrishna Forgings is planning to raise Rs 400-500 crore through qualified institutional placement (QIP) to prune its debt, said people aware of the development. The ... Read more »

PNB Housing shelves share sale plan citing legal delays

PNB Housing Finance has shelved its proposed Rs 4000 crore preferential issue to private equity giant Carlyle Group and co investors including former HDFC Bank CEO Aditya Puri, General Atlantic ... Read more »

Bulls continue to scale new highs: Sensex tops 61k

Mumbai: India’s stock indices continued their bull run on Thursday led by banking and information technology stocks, with the Sensex conquering 61,000, a day after the Nifty ended beyond 18,000 ... Read more »