Advertisement
Friday, Dec 02, 2022
Outlook.com
Outlook.com

Moody's Upgrades Indian Banking System Outlook To ‘Stable’, Economic Recovery To Drive Credit Growth

Moody's expects India's economy to continue to recover in the next 12-18 months, with GDP growing 9.3 per cent in the fiscal year ending March 2022 and 7.9 per cent in the following year.

Moody's Upgrades Indian Banking System Outlook To ‘Stable’, Economic Recovery To Drive Credit Growth
Moody's Upgrades Indian Banking System Outlook To ‘Stable’, Economic Recovery To Drive Credit Growth
outlookindia.com
2021-10-19T15:56:07+05:30

Moody's Investors Service on Tuesday raised the outlook for the Indian banking system to 'stable' from 'negative' citing moderate deterioration of asset quality since the onset of the pandemic and likely pick-up in credit growth with economic recovery.

Moody's expects India's economy to continue to recover in the next 12-18  months, with GDP growing 9.3 per cent in the fiscal year ending March 2022 and 7.9 per cent in the following year.

"The pick-up in economic activity will drive credit growth, which we expect to be 10-13 per cent annually. Weak corporate financials and funding constraints at finance companies have been key negative factors for banks but these risks have receded," Moody's said in its 'Banking system outlook - India' report.

The quality of corporate loans has improved, indicating that banks have recognized and provisioned for all legacy problem loans in this segment.

The quality of retail loans has deteriorated, but to a limited degree because large-scale job losses have not occurred.

"We have revised the outlook for the Indian banking system to stable from negative. The deterioration of asset quality since the onset of the coronavirus pandemic has been moderate, and an improving operating environment will support asset quality. Declining credit costs as a result of improving asset quality will lead to improvements in profitability," Moody's said.

The rating agency assumes that the government will provide a very high level of support for rated public sector banks, given their strong links to the government.

Earlier this month, Moody's had raised India's sovereign rating outlook to 'stable' from 'negative'. It also affirmed the sovereign rating at 'Baa3'.

(With PTI Inputs)

Advertisement

Outlook Newsletters

Advertisement
Advertisement
Advertisement

Read More from Outlook

Lament Of Separation: Songs Of Habba Khatun, Last Queen Of Kashmir, Still Echo In Valley

Lament Of Separation: Songs Of Habba Khatun, Last Queen Of Kashmir, Still Echo In Valley

In happy times and sad, Habba Khatun’s sensuous songs make both young and old emotional. With the never-ending conflict bringing tragedies to every doorstep, Habba’s lyrics of separation amplify their mourning.

How Indian Laws Govern People’s Right To Love And Live

How Indian Laws Govern People’s Right To Love And Live

In India, only those relationships between a man and a woman are considered to be legitimate when there is a marriage between the two.

Kohli Quits Test Captaincy, Leaves Leadership Vacuum

Kohli Quits Test Captaincy, Leaves Leadership Vacuum

Virat Kohli, 33, had recently stepped down as India's T20I captain and was subsequently removed as the ODI captain.

UP Elections 2022: How Congress Is Harnessing Power Of 'Persecuted' Women To Counter BJP

UP Elections 2022: How Congress Is Harnessing Power Of 'Persecuted' Women To Counter BJP

A Mahila Congress leader, who is the face of the ‘Ladki Hoon, Lad Sakti Hoon’ campaign, however, has accused the party of anti-women bias after she was denied a ticket.

Advertisement