INSUBCONTINENT EXCLUSIVE:
Mumbai: Ratings firm Icra on Thursday said it perceives asset quality pressure for banks and non-banks after the three-month moratorium
announced by the central bank ends.
The firm also said that lending institutions with higher share of asset classes such as microfinance,
said Karthik Srinivasan, group head-financial sector ratings at ICRA
estimates, GDP growth is expected to slow down to 2.0 per cent during FY21 from estimates of 4.4 per cent in FY20
On the back of slowing GDP growth and curtailment of discretionary expenditures across the value chain, it is believed that borrowers will
continue to face challenges for some time on normalisation of business conditions across the asset classes once the lockdown is
prevent the capital erosion, the level of stressed assets in relation to the core equity is expected to increase, thereby weakening their
for purchase of corporate debt instruments has softened the bond yields by more than 100 bps during last few days following the sell-off in
capital markets and redemptions witnessed by debt mutual funds in the recent past
Some of the private banks witnessed 3-10 per cent reduction in their deposit base since the imposition of the moratorium on Yes Bank.
ICRA
expects these institutions to maintain excess liquidity and curtail growth, which could result in compression in their interest spreads and
Though the RBI has deferred the scheduled increase in regulatory capital requirements of banks by six months, no budgeted capital for PSBs
for FY2021 will limit the credit growth for banks to around 6.0 per cent and NBFCs to 6-8 per cent as their dependence on banks will
increase in the near term.
With low credit growth, likely rise in credit costs and drag of excess liquidity, ICRA expects the profitability
(RoA) of financial sector entities to be adversely affected by 50-90 bps during FY21.