New Delhi, Nov. 3 -- India's banks are feeling the downside of monetary easing. As loan rates adjust faster than deposit costs, most lenders reported thinner margins in the September quarter, underscoring how the Reserve Bank of India's 100-basis-point rate cuts between February and June have begun to squeeze profitability.

The hit, though expected, appears stickier than banks had guided. Many lenders had projected a recovery in the second half of the year, but second quarter post-result commentaries suggest the pressure could linger as deposits reprice slowly, credit growth picks up pace. and competition intensifies in low-yield segments such as housing.

The trend highlights the uneven impact of monetary easing-while borrowers benefit ...