Cut the rates, never mind the spreads

For the first time in many years, several of India’s state-owned banks will report a double-digit drop in earnings for the three months to March 2013. The pressure on profits has been building up for some time now and while there are some one-off expenses, essentially it’s the weak top line and higher credit costs that will pull down the numbers. But if PSU banks find themselves in a mess today, they have only themselves to blame.

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