Moody’s Upgrade Outlook for the Indian Banking System

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Bond credit rating company Moody’s has stabilized the outlook for the Indian banking system from negative to negative, suggesting that asset quality degradation has been moderate since the start of the Covid-19 pandemic and an improved operating environment. will support.

Moody’s Investors Service said in its Banking System Outlook that India’s economy will continue to recover over the next 12-18 months, with GDP growing by 9.3 percent in the fiscal year ending March 2022 and 7.9 percent next year. Accelerated economic activity will accelerate credit growth, which is estimated at 10-13 per cent per annum. In addition, weak corporate financials and lack of funding in financial institutions have been major downside factors for banks, but these risks have been mitigated, it said.

The basis for the revision of Moody’s outlook for the Indian banking system has been the limited impact it has on the deterioration in the asset quality of banks despite relatively limited regulatory support for borrowers. We expect asset quality to improve further, leading to a decline in credit costs, as economic activity returns to normal,” Moody’s Banking System Outlook said.

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