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India Ratings raises banking sector outlook to ‘stable’

India Ratings and Research on Monday revised its outlook on the overall banking sector to ‘stable’ for the FY22 from ‘negative’ even as it saw higher stress emerging in the retail loan segment, going ahead.

For public sector banks (PSBs), the outlook has been revised to ‘stable’ from ‘negative’ and for private banks, the agency continues to have ‘stable’ outlook.

It estimated that overall stressed assets (gross non-performing assets + restructured assets) could rise 30% for the banking system; the increase is almost 1.7 times in the retail segment in the second half of FY22.

“The last nine months have provided banks the opportunity to beef up their provisions even more for legacy stressed assets, which were existing before the pandemic,” said the agency’s director (financial institutions), Jindal Haria.

 

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