New Delhi: Moody Investor Services on Tuesday raised prospects for the Indian banking system for ‘stable’ of ‘negative’ quoting moderate setbacks of asset quality since the emergence of pandemics and the possibility of pick-up in economic recovery.
Moody’s expects the Indian economy to continue recovering in the next 12-18 months, with GDP growing 9.3 percent in the fiscal year ending March 2022 and 7.9 percent the following year.
“His pickup in economic activities will encourage credit growth, which we expect 10-13 percent every year.
Weak company companies and funding constraints in financial companies have become a major negative factor for banks but this risk has receded,” Moody’s said.
In the report ‘Banking System – India’.
The quality of corporate loans has increased, indicating that the Bank has recognized and provided for all legacy loans in this segment.
The quality of retail loans has deteriorated, but to a limited level because the loss of large-scale jobs has not happened.
“We have revised prospects for the Indian banking system to stable from negative.
The setback of asset quality since the onset of Coronavirus pandemic has been moderate, and the operating environment that increases will support the quality of assets.
Reducing credit costs as a result of improvement.
Asset quality will cause increased profitability,” Moody said.
The rating agency assumes that the government will provide a very high level of support to rank public sector banks, considering their strong relationship to the government.
Earlier this month, Moody’s has raised the prospect of Indian Sovereign ratings for ‘stable’ of ‘negative’.
It also confirms the Sovereign rankings in ‘BAA3’.