Moody’s expects India’s economy to continue to improve over the next 12-18 months, with GDP growing 9.3% in the fiscal year ending March 2022 and 7.9% next year.
Moody’s Investors Service on Tuesday downgraded the outlook for the Indian banking system from ‘negative’ to ‘stable’, citing a slight deterioration in asset quality since the start of the pandemic and a possible pick-up in credit growth with the economic recovery. Given.
Moody’s expects India’s economy to continue to improve over the next 12-18 months, with GDP growing 9.3% in the fiscal year ending March 2022 and 7.9% next year.
Moody’s upgrades India’s outlook from ‘negative’ to ‘stable’
“Economic activity will accelerate credit growth, which we expect at 10-13% per annum,” he said. Weak corporate finance and lack of funding in finance companies have been major downside factors for banks, but these risks have been mitigated,” Moody’s said in its ‘Banking System Outlook – India’ report.
The quality of corporate loans has improved, indicating that banks have recognized and provisioned all old problem loans in this section. The quality of retail loans has declined, but to a limited extent, not because of massive job losses.
“We have revised the outlook for the Indian banking system from negative to stable. Asset quality degradation has been moderate since the start of the coronavirus pandemic and an improved operating environment will support asset quality. The decline in credit cost as a result of improvement in asset quality will improve profitability,” Moody’s said.
The rating agency is of the view that given their strong relationship with the government, the government will provide a very high level of support to the rated public sector banks.
Earlier this month, Moody’s raised India’s sovereign rating outlook from ‘negative’ to ‘stable’. It also confirmed the sovereign rating at ‘Baa3’.
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