0 Systemic risk facing banks in India is likely to remain high in the wake of the second wave of COVID-19 infections and a high proportion of weak loans. This is even though India's economic recovery and steps by the central bank and the government to cushion the effects of the economic crisis will continue to limit stress on the balance sheets of these banks, says S&P Global Ratings.
In a report, the ratings agency says, "We estimate the Indian banking system's weak loans are at 11%-12% of gross loans. We forecast credit losses will decline to 2.2% of total loans in the year ending 31 March 2022, (fiscal 2022) and 1.8% in fiscal 2023, after staying elevated at an average of 2.8% in fiscals 2016-2021. Our expected credit costs for banks in India are in line with those for banks in other emerging countries such as China and Thailand. However, provisioning coverage in China and Thailand is much higher than in India."