New Delhi, July 14 -- The net interest margins (NIMs) of banks in India are expected to improve after the third quarter of the current financial year 2026 (3QFY26), according to a report by Motilal Oswal.

The report highlighted that investor opinions are divided on how long the current softness in margins will last, but there is broad consensus that NIMs for larger and better-managed banks are likely to bottom out by 3QFY26. A gradual recovery is expected thereafter.

It stated "banks are likely to see NIMs bottom out by 3QFY26, followed by a gradual recovery thereafter".

The report noted that NIMs remain the most closely tracked metric for the banking sector. While a contraction in margins is likely during the ongoing rate cut cycle, t...