In a declining interest rate scenario, Banks will reprice their liabilities (deposits etc.) faster than their assets (loans etc.)resulting in higher Net Interest Margins in the short term.

During the Global Financial Crisis (GFC 2008 - 2010) Registered Finance Companies (RFCs) managed to achieve attractive interest margins as RFCs genarally borrow short term and lend long term as their high interest earning lending portfolio is financed by lower cost borrowings

There are downsides to implicitly trusting banks, as the 2008 financial crisis showed.

In a relatively low interest rate environment, Commercial Banks will record growth in deposits via the growth in the Current And Savings Accounts (CASA) base owing to the prevailing low rate differential between Fixed Deposits and Savings Deposits

Rate cuts may spur credit growth, however a government will have to keep a closer eye on it's inflation in order to minimize the demand pull inflationary effect

Whole Sale Lenders (WSL) such as Development Financial Institutions (DFIs) will differ from Retail Lenders (RL) on the following key elements / ratios 1.) WSLs have a low cost to income ratio 2.) WSLs have a relatively lower Net Interest Margin 3.) WSLs have a Loan to Deposit Ratio (LDR) in excess of 100% 4.) WSLs have a Borrowings (excluding repo investments) to Deposit Ratio (LDR) in excess of 100% 5.) WSLs have a relatively high total Capital Adequacy Ratio (CAR) , i.e. Tier I + Tier II