Moody’s raises banking system outlook to stable: The Tribune India

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New Delhi, October 19

Moody’s Investors Service on Tuesday raised the outlook for the Indian banking system from “stable” to “negative”, citing a moderate deterioration in asset quality since the start of the pandemic and a likely resumption in credit growth with the economic recovery.

Moody’s expects the Indian economy to continue to recover over the next 12-18 months, with GDP growth of 9.3% in the fiscal year ending March 2022 and 7.9% % the next year.

“The resumption of economic activity will stimulate credit growth, which we expect to be 10 to 13% per year. Weak corporate finances and funding constraints for finance companies have been key negative factors for banks, but these risks have diminished, ”Moody’s said in its“ Banking System Outlook – India ”report.

The quality of personal loans has deteriorated, but to a limited extent as there have been no large-scale job losses. “We have revised the outlook for the Indian banking system from stable to negative. The deterioration in asset quality since the onset of the coronavirus pandemic has been moderate, and the improved operating environment will support asset quality. Lower credit costs resulting from improved asset quality will lead to improved profitability, ”Moody’s said. – PTI

The main negative factors are fading away

  • Moody’s expects the Indian economy to grow 9.3% in the current fiscal year and 7.9% the following year
  • He said the quality of business loans has improved, indicating that banks have recognized and provisioned all legacy problem loans in this segment.
  • He said weak corporate finances and funding constraints for finance companies have been key negative factors for banks, but these risks have diminished.


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