Mumbai: India’s banking system outlook is likely to be stable over the next 12-18 months as the pace of formation of bad loans is expected to decrease compared to last five years, global rating agency Moody’s said on Monday.
Under the asset quality recognition (AQR) of the Reserve Bank, lenders have recognised a major portion of their non-performing assets (NPAs) or bad loans, it said.
“The pace of deterioration in asset quality over the next 12-18 months should be lower than what was seen over the last five years, especially compared to the fiscal 2015-16, even as we take into account some remaining problem loan under —recognition in a handful of large accounts,” Moody’s vice-president and senior credit officer Srikanth Vadlamani said.
Meanwhile, SBI chairperson Arundhati Bhattacharya said the stressed assets level in the banking sector will come down once the key industrial sectors start functioning at their optimum capacity.
