Covid-19: Moody's changes outlook on Indian banks from stable to negative

Stating that asset quality will deteriorate, Moody's said a sharp decline in economic activity and a rise in unemployment will lead to a deterioration of household and corporate finances

Moody's Investors Service on Thursday changed the outlook for the Indian banking system to negative from stable, as it expects a deterioration in banks' asset quality due to disruption in economic activity from the coronavirus outbreak. It said Banks' asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital.

"We have changed the outlook for the Indian banking system to negative from stable. Disruptions to economic activity from the coronavirus outbreak will exacerbate a slowdown in India's economic growth," Moody's said.

Stating that asset quality will deteriorate, Moody's said a sharp