Indian banks NPAs are slowing, outlook stable: Moody`s

Moody's Investors Service, a global rating agency, has said that India's banking system is moving past the worst of its asset quality down cycle, supporting its stable outlook for the sector over the next 12-18 months. 

 

"While the stock of impaired loans may still increase during the horizon of this outlook, the pace of new impaired loan formation should be lower than what it has been over the last few years," says Srikanth Vadlamani, a Moody's Vice President and Senior Credit Officer. "The performance of India's state-owned and private banks continues to diverge," adds Vadlamani. 

 

"The state-owned banks will require significant capital over the next three years with limited access to the capital markets, while the private banks benefit from solid capitalization and good profitability." The stable outlook is based on Moody's assessment of five drivers: operating environment; asset risk and capital; funding and liquidity; profitability; and government support. The operating environment for Indian banks is supported by a stabilizing economy. 

 

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