New Delhi, Oct. 7 -- The Reserve Bank of India's latest rate hike and the possibility of further monetary tightening could become an earnings catalyst for Indian banks, particularly larger private-sector and public-sector lenders, as loan yields reprice faster and margins improve, according to a Jefferies equity research report.

The assessment comes after the RBI's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50 per cent and shifted its policy stance from "neutral" to "calibrated tightening", signalling that the current tightening cycle may have further to run.

"This can be a positive catalyst for the earnings of larger private banks, PSU banks and HFCs, whereas a slight risk for smaller private banks, NBFCs an...