Good hints from S&P report! Improvement in Indian economy will reduce pressure on banking sector, loans will be back

The S&P said, the Indian economy is rapidly recovering from the effects of the Corona crisis.

The S&P said, the Indian economy is rapidly recovering from the effects of the Corona crisis.

The global rating agency Standard and Poor’s (S&P) has said in its report that Modi government’s efforts to save Indian banks from the impact of the Corona crisis have been largely successful. Also said that the Indian economy is rapidly recovering from the Corona crisis. India’s economic risk trend is stable.

New Delhi. In its new report, the global rating agency Standard and Poor’s (S&P) has said that the improvement in the conditions of India’s Macro-Economy will reduce the pressure on the country’s banking system. Also said that the weak loan of banking system is 12 percent of the total loan. Apart from this, it has been said that the Indian economy is rapidly recovering from the effects of the Corona crisis. The S&P estimates that a fall in the country’s gross domestic product (GDP) due to the Corona crisis could reach 10 percent.

‘Credit risk is very high for banks in India’
The rating agency estimates that the debt cost will improve to 2.2 per cent of the total loan in the financial year ending 31 March 2022. At the same time, it will remain at 2.7 percent in the year 2021. The agency has placed India’s banking sector in Group-6. S&P says that India’s economic risk trend is stable. At the same time, credit risk for banks is very high. Indian banks owe huge loans to big companies. Regarding the new laws of the government, the solution of bad loans is at a very slow level. The recession caused by the Corona epidemic has slowed the improvement in asset quality of Indian banks.

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S&P has said in the report that the Corona crisis has had a very bad impact on India’s small and medium industries. This has worsened the situation of retail and especially unsecured loans of banks. Steps such as the Emergency Guarantee Scheme for SMEs taken by the government and the Reserve Bank of India will ease the pressure on banks. In the budget announced in FY 2022, the establishment of Bad Bank and strengthening of NCLT framework work has been announced. The agency says that the government’s move can benefit banks. The report said that along with the improvement in the economy, all the sectors of the economy will gain momentum, due to which loans from the banking sector can be withdrawn and this sector can get relief.



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