India’s banks: $21 billion down, their glory days fading away.

The $21 billion rout in India’s banking sector, with HDFC Bank experiencing falling net interest margins and weaker deposit growth, signals that the best days for the country’s banks may be over. The top 12 largest banks in India are set for their worst week since September, erasing nearly $21 billion in market value. Analysts have raised concerns about slower earnings growth for large-cap banks in the coming years, which is expected to drag down stock prices. Private sector banks and non-bank lenders may also face challenges as liquidity remains tight and they chase market share in loans. The waning prospects of the banking sector are bad news for the broader market, as banks make up a significant portion of the NSE Nifty 50 Index and accounted for 15% of its gains last year.