These and other gradual changes in the balance sheets of banks, along with the sustained decline in market rates, helped compress net interest margins at many banks, as they chose not to reflect the full effect of lower market rates into rates paid on deposits without a specified maturity.
Till 2001, the burden (the excess of non-interest expenditure over non-interest income as a percentage to total assets) of commercial banks hovered around 1 to 1.5 per cent. This gap between intermediation cost and income from fee-based activities has narrowed considerably in recent years.