New Delhi, May 5 -- India's banking sector, after a period of strong profitability and balance sheet improvement, is entering a more complex phase marked by emerging structural pressures, according to a report by McKinsey & Company.

The report, titled "Indian Banks: Navigating through the turbulence," highlights that while banks have benefited from robust macroeconomic growth and improved asset quality, headwinds such as margin compression, rising costs, and evolving credit risks are beginning to surface.

"Indian banks have been outperforming global peers, but they are still facing headwinds," the report noted, pointing to growing challenges that could test the sustainability of recent gains. It added that profitability has reached a pe...