{"id":2664,"date":"2016-09-20T15:13:57","date_gmt":"2016-09-20T15:13:57","guid":{"rendered":"https:\/\/sunkrish.com\/?p=2664"},"modified":"2017-01-05T02:54:19","modified_gmt":"2017-01-05T02:54:19","slug":"indias-banking-outlook-stable-worst-asset-quality-cycle-almost-over-moodys","status":"publish","type":"post","link":"https:\/\/sunkrish.com\/index.php\/2016\/09\/20\/indias-banking-outlook-stable-worst-asset-quality-cycle-almost-over-moodys\/","title":{"rendered":"India\u2019s banking outlook stable, worst asset quality cycle almost over: Moody\u2019s"},"content":{"rendered":"

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India\u2019s banking system outlook is\u00a0likely to be stable over the next 12-18 months as the pace of\u00a0formation of bad loans is expected to decrease compared to\u00a0last five years, global rating agency Moody\u2019s said today.\u00a0Under the asset quality recognition (AQR) of the Reserve\u00a0Bank, lenders have recognised a major portion of their\u00a0non-performing assets (NPAs) or bad loans, it said.\u00a0\u201cThe pace of deterioration in asset quality over the\u00a0next 12-18 months should be lower than what was seen over the\u00a0last five years, especially compared to the fiscal 2015-16,\u00a0even as we take into account some remaining problem loan under\u00a0-recognition in a handful of large accounts,\u201d said Moody\u2019s Vice-\u00a0President and Senior Credit Officer Srikanth Vadlamani.<\/p>\n

Aside from these legacy issues, the underlying asset trend\u00a0for Indian banks will be stable because of a generally\u00a0supportive operating environment, he added.\u00a0Moody\u2019s said the stable outlook for the banks over the\u00a0next 12-18 months reflects its assessment that the system is\u00a0moving past the worst of its asset quality down cycle.\u00a0The credit rating firm today released a report \u2014 \u2018Banking\u00a0System Outlook \u2014 India: Bottoming Asset Cycle, Strong\u00a0Liquidity Support Stable Outlook\u2019.\u00a0The agency rates 15 banks in the country that together\u00a0account for around 70 per cent of system assets. The ratings\u00a0outlook on 11 of the banks is positive.\u00a0Vadlamani expects net interest margins (NIMs) of banks\u00a0to stabilise, given the expectation of limited policy rate\u00a0cuts over the next 12 months, with an upside risk coming from\u00a0current changes in portfolio mixes in favour of higher\u00a0yielding retail loans.<\/p>\n

\u201cCredit costs will also remain high for the sector,\u00a0including for some private sector banks, but will be no higher\u00a0than in recent years for the industry overall.\u201d\u00a0Indian banks\u2019 capital strength will continue to show\u00a0divergence between the weak public banks and the far stronger\u00a0private lenders, he said. State-owned banks will require significant external\u00a0infusions of equity capital over the next three years.\u00a0\u201cFor state-run banks to have a credit growth of 12-15 per\u00a0cent over the next three years, equity capital requirement\u00a0will be of USD 1.2 trillion,\u201d he said.<\/p>\n

The PSU banks have not been able to demonstrate access to\u00a0the equity capital markets, while the announced capital\u00a0infusion plans of the Government fall short of the amount\u00a0required for full recapitalisation, Vadlamani said.\u00a0\u201cA potential way to bridge this capital shortfall would be\u00a0to slow loan growth to the low single digits over the next\u00a0three years,\u201d he said.<\/p>\n

Source: http:\/\/indianexpress.com\/article\/business\/banking-and-finance\/indias-banking-system-outlook-stable-worst-asset-quality-cycle-almost-over-moodys-3039297\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

India\u2019s banking system outlook is\u00a0likely to be stable over the next 12-18 months as the pace of\u00a0formation of bad loans is expected to decrease compared to\u00a0last five years, global rating agency Moody\u2019s said today.\u00a0Under the asset quality recognition (AQR) of … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":3032,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15,4,493,5],"tags":[332,305,331,321,393,367],"class_list":["post-2664","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-business-advisory-services","category-financial-corporate-services","category-economy-business-updates-corporate-affairs","category-india-international-corporate-updates","tag-capital","tag-economy","tag-fund-raising","tag-moody","tag-non-performing-assets-npa","tag-reserve-bank-of-india-rbi"],"_links":{"self":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/2664","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/comments?post=2664"}],"version-history":[{"count":3,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/2664\/revisions"}],"predecessor-version":[{"id":3033,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/2664\/revisions\/3033"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media\/3032"}],"wp:attachment":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media?parent=2664"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/categories?post=2664"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/tags?post=2664"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}