Valuations of banking stocks may come under pressure amid economic slowdown

Meanwhile, there is enough evidence to indicate that NBFCs, real estate sector and retail loans may not presently be in a safe zone for banks to be complacent about

Who would have envisaged a year back, when there were first signs of stress in the form of a liquidity squeeze, thanks to the IL&FS fiasco, that it would have a cascading impact on India’s financial system.  That the count of public sector banks (PSBs) would further shrink and that there would be so much thrust on transmitting repo rate cuts that banks may have to work harder to protect their net interest margin (NIM).

But, the more important demon that they are grappling with is that of slowing loan growth. When non-banking finance companies (NBFCs) decided to go slow