India s largest banks are poised to improve their asset quality in the current fiscal year, bolstered by record net incomes that will enable them to enhance their balance sheets and underwriting standards, according to an analysis by S&P Global Market Intelligence.
"Slower loan growth and an increased emphasis on risk management will likely support asset quality in the Indian banking system," said S&P Global Ratings credit analyst Geeta Chugh.
The Reserve Bank s decision to tighten norms for consumer credit by raising risk weight for unsecured personal loans is likely to hit banks capital adequacy by 60 basis points, S&P Global Ratings said on Friday.
The move will curtail riskier bank lending to consumers and is expected to
The RBI increased risk weights on unsecured personal loans, credit cards, and lending to nonbank finance companies (NBFCs) by 25 percentage points on Thursday. S&P Global Ratings noted that the move will likely lead to higher lending rates, lower credit growth, and an increase in the need for capital raising among weak lenders.