Swift economic recovery key to limit loan losses for Indian banks: Fitch

Lenders face a tough operating environment in the near term, with a spike in stressed loans and write-offs due to the economic fallout of the coronavirus pandemic

Swift economic recovery will be critical in limiting loan losses for Indian banks in what is likely to be a protracted period of weakness in the asset-quality cycle, says Fitch Ratings.

Indian lenders face a tough operating environment in the near term, as stressed loans and write-offs increase as a result of the economic fallout of the coronavirus pandemic.

In September, Fitch revised India’s (BBB-/Negative) growth forecast for the year ending March 2021 (FY21) to -10.5 per cent, from five per cent. This revision partly reflected the 23.9 per cent (year-on-year) decline in real Gross Domestic Product (GDP) in April-June 2020 period