Net Interest Margin (NIM) is a key banking metric that measures the difference between interest earned on loans and interest paid on deposits, expressed as a percentage of average earning assets.
NIM reflects how efficiently a bank generates income from its core lending business. A higher NIM indicates better profitability, as the bank earns more from loans compared to what it pays on deposits.
Banks operate under regulatory frameworks of the Reserve Bank of India, and NIM is closely watched by investors and analysts.
👉 NIM = (Interest Income – Interest Expense) ÷ Average Earning Assets × 100
"If a bank earns ₹10 crore in interest and pays ₹6 crore, with ₹100 crore assets: 👉 NIM = 4%"