Net interest margin (NIM): what it means and how to read it
What is Net interest margin (NIM)?
The gap between the interest a lender earns on its loans and investments and the interest it pays on deposits and borrowings, as a share of its interest-earning assets.
Net interest margin measures how much a lender keeps from each rupee it lends after paying for the money. A bank that pays depositors 5% and lends at 9% does not keep the full 4 points: some assets earn nothing and some money is held as reserves, so the reported margin is lower.
Margins move with interest rates and with the mix of the business. When rates rise, banks with many floating-rate loans and sticky low-cost deposits see margins widen first and narrow later as deposits reprice. A margin held steady through a full rate cycle says more about a bank than a high one in a good year.
How it is calculated
A worked example
Why does Net interest margin (NIM) matter?
It is the lender's gross margin: the spread it keeps for standing between savers and borrowers. Almost everything else a bank earns is built on it.
What is a good Net interest margin (NIM)?
Most large Indian banks run between 2.5% and 4%. Lenders to riskier borrowers, such as microfinance and unsecured personal loans, earn far more and lose more to bad loans.
Compare like with like. Around 3% to 4% is healthy for a diversified private bank, 2.5% to 3% is common for large public sector banks, and 6% to 10% is normal for microfinance and small finance banks. A margin far above peers usually means riskier lending, so read it beside credit cost and gross NPA.
Reading scale
What are the common mistakes with Net interest margin (NIM)?
What is a typical Net interest margin (NIM) in India today?
The median across the 666 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.