Mumbai, July 21 -- India's two biggest private lenders-HDFC Bank and ICICI Bank-posted muted loan growth and thinner margins in the June quarter, underscoring the challenges banks face as the Reserve Bank of India's (RBI) recent rate cuts begin to compress lending spreads. With monetary transmission still playing out, both lenders are betting on a demand revival in the second half, driven by the festival season and easing inflation. Their Q1 results, however, reflect a cautious start to the fiscal year.

Weaker credit growth across the country's top three private banks-Axis Bank reported its Q1 earnings on 17 July-suggests a broader trend of lender caution and moderating retail demand, especially in housing and auto loans. While successiv...