MUMBAI: Falling growth in loans is making banks to look at the possibility of lowering the interest rates on savings bank accounts so as to improve their pre-provision operating profits, investment banking firm Jefferies said.In an industry note on Indian banking sector about the concerns of investors after the US roadshows , Jefferies said: "Falling loan growth doesn't augur well with NIMs (net interest margin). "According to the report, with falling loan:deposit ratios, weak loan growth and compressing spreads, banks are looking at the possibility of lowering the savings interest rates. But there was comfort with the longer-term investment thesis driven by government initiatives, the report said. "Power sector overhang needs a faster asset quality resolution. Investors were concerned about the lack of asset quality resolution which could stall the medium term loan growth for the banks," it added.

Source: Economic Times March 28, 2017 08:03 UTC