Moody’s Investors Service expects deterioration in bank asset quality because of the disruption in economic activity due to COVID-19. Moody’s has already changed the outlook for the banking system to negative from stable and expects a spike in NPAs. It expects GDP growth to slow to 2% during fiscal 2020-21 and 4.4%. Fitch has also downsized India’s GDP growth to 2% for 2020-21. The big pressure could come from private banks where gross slippage rate is expected to be around 4-5%.
Moody’s Investors Service expects deterioration in bank asset quality because of the disruption in economic activity due to COVID-19. Moody’s has already changed the outlook for the banking system to negative from stable and expects a spike in NPAs. It expects GDP growth to slow to 2% during fiscal 2020-21 and 4.4%. Fitch has also downsized India’s GDP growth to 2% for 2020-21. The big pressure could come from private banks where gross slippage rate is expected to be around 4-5%.