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India's retail, small business loans to deteriorate: Moody's
Jun-04-2020

Days after downgrading India's sovereign ratings, Global credit ratings agency Moody's Investors Service has said that the quality of retail and small business loans will deteriorate, which account of 44 per cent of the total loans.  Elaborating on the key drivers behind India's sovereign downgrade, it said that the risks to the financial system are rising.

It said some sectors were already under strain before the coronavirus outbreak. For NBFIs, both assets and liabilities will come under a strain in the near term, this is about 10-15 per cent of bank loans. Private power sector exposure is about 8-10 per cent of bank loans. In the auto value chain, the most exposed banks are the private sector banks. It said that policymaking institutions face increasing challenges from lower growth, weaker fiscal conditions and rising financial sector stress.

The agency said that the risks to the financial system are rising. It added ‘our rating action signals downward pressure on the ratings and standalone assessments of most rated banks. Over 80 per cent of rated non-financial companies have negative outlooks or are under review for downgrade. Two-thirds of the rated infrastructure portfolio has a negative bias.

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