In effect, there  6  Net interest margin is defined as the difference between a bank’s interest income (on its loans and assets) less its interest expenditure (on its deposits and other borrowings). 11  has been a cross-subsidisation of corporate loan losses by lending rates in healthier sectors such as in retail.
Finally, the competition that banks face from alternative instruments of financial savings – such as mutual funds and small saving schemes – also seems to have made banks hesitant in varying the interest rates on term deposits in consonance with policy rate signals.