New Delhi, Feb. 18 -- The Indian banking sector experienced a more severe impact in the third quarter of FY25 than previously anticipated, says a report by Centrum.

The report highlighted a noticeable slowdown in both loan and deposit growth, rising credit costs, and weakening profitability across most banks.

It said "a challenging period for banks in our coverage universe, driven by the continued downtrend in the microfinance (MFI) segment (which impacted small finance banks) and an overall slowdown in system credit growth. However, the actual impact was more severe than expected, as reflected in Q3FY25 results".

According to the report, sequential loan book growth in Q3FY25 stood at 2.8 per cent quarter-on-quarter (QoQ), a significan...