Banks' asset quality to worsen but face less risk of defaults: Moody's

The disruptions from the coronavirus outbreak will strain finances for households and small businesses more severely

Ratings agency Moody’s on Wednesday said corporate houses will not be immune to the deep economic contraction in India following the Covid-19 outbreak. However, risks from corporate loans are lower now than in the 2012-19 period as both banks and corporate houses took steps to repair asset quality and financial profile.

The Covid disruption will strain finances of households and small businesses more severely, Moody’s said. “While asset quality risks are rising for Indian banks amid the country’s economic contraction, risks from corporate loans have decreased from the previous credit cycle,” Moody’s said.

“Corporates will not be immune from the ongoing contraction…