Even so, the net interest margin of the Indian banking system is higher than that in some of the other emerging market economies even after accounting for mandated social sector obligations such as priority sector lending and credit support for the government’s anti-poverty initiatives. 42.
The efficiency gap between us and our peer group of countries is indicative of the catch-up job we have to do. There are several ways of improving efficiency. By far the most important task is to further improve operating efficiency on top of what has already been achieved by optimizing operating costs i.e. non-interest expenses including wages and salaries, transaction costs and provisioning expenses.