Mumbai, Oct. 19 -- A surge in foreign-currency deposits has bolstered Indian banks' liquidity and supported strong credit growth, but the funds have also squeezed net interest margins (NIMs) in the September quarter, particularly at private-sector lenders.

The pressure was visible at HDFC Bank, ICICI Bank and Axis Bank, even as all three reported higher year-on-year net profit for the July-September quarter of FY27. ICICI Bank's NIM declined to 4.18% from 4.36% in the June quarter, while Axis Bank's fell to 3.36% from 3.46%. HDFC Bank reported a NIM of 3.2%, down from 3.3% a quarter earlier.













The margin compression reflects the impact of foreign-currency non-resident (bank) or FCNR(B) deposits, which banks have mobilized fast...