Economic recovery reduces slippage risk for Indian PSBs: Moody's

"While the government's capital infusion into public sector banks will help them meet Basel capital requirements, it will not boost credit growth," the agency said

Global rating agency Moody's on Thursday said that India's economic recovery reduces the risk of a sharp deterioration in public sector banks' (PSBs) mildly improving asset quality.
 

However, the capital shortfalls will remain despite a likely government equity infusion and this makes banks vulnerable to unexpected shocks and restricting credit growth.
 

"Various measures by the government to support borrowers have helped curb growth in public sector banks' non-performing loans (NPLs), and the volume of restructured loans is not as large as we anticipated," said Rebaca Tan, a Moody's assistant vice president and analyst.
 

Asset quality at the five largest rated