Gold prices just lower; monthly gains on track
Investing.com -- Indian banks are projected to maintain consistent asset quality over the next year, despite rising global economic uncertainties, according to a Tuesday report from Moody’s Ratings. The agency attributes this stability to supportive domestic macroeconomic conditions, including government capital expenditure, tax relief for middle-income households, and monetary policy easing.
These measures are anticipated to stimulate consumption and investment, assisting lenders in managing asset quality. Furthermore, India’s minimal reliance on global goods trade is expected to provide a buffer against external risks, Moody’s noted.
The Reserve Bank of India (NSE:BOI) (RBI) is set to make its next policy decision on Friday. The central bank is predicted to decrease the repo rate by 25 basis points for the third time in a row.
Moody’s anticipates that the systemwide non-performing loan (NPL) ratio will stay within the range of 2% to 3% over the upcoming year, which is roughly the same as the 2.5% recorded at the conclusion of December 2024.
The performance of wholesale loans, those provided to organizations, is expected to remain robust for Indian lenders. This is due to companies maintaining good profitability and low leverage levels.
However, the future of unsecured retail loans appears less promising. Moody’s cautioned that the formation of new NPLs in this sector has risen over recent quarters, contrasting with the relatively stable performance of secured retail loans.
Moody’s further stated that smaller private sector banks, with a higher exposure to unsecured lending, will likely continue to experience more asset quality pressures than their larger private and public sector counterparts.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.