Breaking News

Moody's changes outlook on Indian banks to negative

New Delhi: Moody's Investors Service on Thursday changed the outlook for Indian banking gadget to damaging from solid, because it expects deterioration in banks' asset high quality due to disruption in economic task from the coronavirus outbreak.

It said Banks' asset high quality will deteriorate around the company, small and medium enterprises and retail segments, leading to pressure on profitability and capital.

"We have changed the outlook for the Indian banking system to negative from stable. Disruptions to economic activity from the coronavirus outbreak will exacerbate a slowdown in India's economic growth," Moody's said.

Stating that asset high quality will deteriorate, Moody's said a sharp decline in economic task and a upward thrust in unemployment will result in a deterioration of household and company price range, which in turn will result in will increase in delinquencies.

"Growing solvency stress among non-bank financial institutions will increase risks to banks' asset quality because banks have large exposures to the sector," it added.

It expects deteriorating profitability and mortgage expansion to hurt capitalisation.

"Increases in loan loss charges and declines in revenue will hurt banks' profitability, which will lead to a deterioration of capitalization. If the government makes more capital infusions into PSBs, as it has in the past few years, it will mitigate capital pressure for them," it added.

It said whilst funding and liquidity at public sector banks (PSBs) will be solid, rising chance aversion within the gadget following a default by means of a private sector bank (Yes Bank) will increase funding and liquidity pressure on small personal sector lenders.

"Disruptions from the coronavirus outbreak will exacerbate India's economic slowdown. A deterioration of global economic conditions and a 21-day lockdown imposed by the Indian government in an effort to slow the spread of coronavirus will weigh on domestic demand and private investment," Moody's added.

Moody's rates 16 industrial banks in India, which in combination account for around 75 in step with cent of deposits within the gadget. PTI JD
Financial markets to remain closed for Ram Navami
Mumbai, Apr 2 (PTI) The BSE, National Stock Exchange and currency markets will remain closed on Thursday because of ‘Ram Navami'.

No comments