Rating agency Standard & Poor’s today said the systemic risk facing banks in India is likely to remain high in the wake of the second wave of Covid-19 infections and the high proportion of weak loans.
This is despite India's economic recovery, though the central bank and the government’s efforts to cushion the effects of the economic crisis will limit the stress on the balance sheets of these banks.
The control of Covid-19 remains a key risk for the economy. New infections have spiked in recent weeks and the country is in the middle of a second pandemic wave. Some targeted lockdowns have already been implemented and more will likely be needed. The impact of broader lockdowns on the economy could be substantial, depending on their length and scope, S&P said in a statement.