According to The Reserve Bank of India, the profitability of the banks is likely to suffer mainly because of the increase in the interest rate and high cost of funds.
In the Financial Stability Report, RBI said “Going ahead, with hardening interest rates and the imminent increase in cost of funds, the credit growth is expected to slow down, which could adversely affect the profitability.”
The profits of public sector banks were lower than those to the private sector banks mainly because of the hike in the saving account rates and due to the pension liabilities.
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