What are rating agencies now projecting for the banking sector and the GDP growth for India in the near future?

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%.