Mumbai, Sept. 3 -- Banks may face near-term pressure on their net interest margins (NIMs) due to limited spreads on the overseas leveraged portion of FCNR(B) deposits, although the deployment of these deposits and an improving asset mix are expected to support faster balance sheet growth and earnings, Motilal Oswal Financial Services said in a report.

NIM refers to the difference between the interest a bank earns and the interest it pays on deposits.

According to the report, the limited spread on the overseas leveraged portion of FCNR(B) deposits could weigh on NIMs in the near term. However, the deployment of these deposits, along with an improving asset mix, is expected to drive faster balance sheet growth and support earnings.

The r...